Air New Zealand is cutting flights on routes in and out of Auckland, Wellington and Christchurch as jet fuel prices surge, with the airline saying most affected customers are being offered alternative flights the same day.
The cancellations are expected to hit the country’s busiest domestic and regional links, while flights to smaller airports will remain unchanged. Air New Zealand had already cut some flights last month, and a spokesperson said the carrier is now dealing with jet fuel prices that are more than double what they would usually be.
That squeeze is not unique to New Zealand. Benchmark European jet fuel prices hit an all-time high of $1,838 per tonne last week, up from $831 before the war began, as the conflict between the United States and Israel and Iran continues to ripple through supply chains. The Gulf provides about 50% of Europe’s aviation fuel imports, and most of that fuel comes through the Strait of Hormuz, which Iran has effectively closed in response to US and Israeli attacks.
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Jet fuel typically makes up 20% to 40% of airlines’ operating costs, and carriers around the world have been moving quickly to protect margins. Delta told investors on Wednesday that fuel costs in the January-March period jumped 14% to $2.7 billion and that it plans to cut around 3.5% of passenger capacity, focusing on red-eye and mid-week flights. Ed Bastian said there was a high sense of urgency to address higher fuel costs and reduce unprofitable flying.
Other airlines are already raising fares and surcharges. Air India is changing its domestic fuel surcharge from a flat fee to one based on distance and has increased international surcharges, while United Airlines and Scandinavia’s SAS have cut flights and raised ticket prices. Air France-KLM has said it will lift fares for long-haul journeys, and Cathay Pacific is raising its fuel surcharge.
The immediate question is how long airlines can keep trimming schedules before higher fuel bills reach passengers in a broader, more visible way. If the conflict keeps pushing fuel costs higher, more cancelled flights and higher fares are likely to follow.
