The War with Iran has impacted global air travel, including flights rerouting from conflict zones and increases in jet fuel prices due to limitations on oil shipments through the Strait of Hormuz. The length of the War in Iran will have key implications on global airlines and the global supply of jet fuels. Continued conflict and a re-closing of the Strait of Hormuz over the next three weeks will create shortages in jet fuel supplies for the start of the summer travel season. Impacts of the shortened supply including fare hikes and capacity reductions are already being seen by travelers on South Asian airlines (which are most reliant on supplies from the Gulf region), and European Airlines who are calling on the European Commission for emergency action to address a potential shortage. US airlines have begun to pass cost hikes onto consumers through increased checked bag fees and fare increases. A prolonged conflict will place airlines, particularly smaller carriers, in a more vulnerable financial position, due to both a continued supply shortage and a potential reduction in consumer demand.

Increase in Jet Fuel Costs

The US and Israel’s War with Iran created an energy shock, restricting movement of oil supplies through the Strait of Hormuz. In March, jet fuel prices increased 103%, with US jet fuel prices increasing from $2.50 a gallon to $4.88 a gallon from late February to early April.  The early April US jet fuel prices were around $205 per barrel. Jet fuel typically accounts for 25 to 30% of airline operating costs. For airlines, it is the second-largest expense after labor and the most volatile component of their operating

Oil futures indicate that the market is anticipating a reduction in oil prices in May and June, but it is still unknown if a quick resolution will occur. While futures for May and June are lower than current prices, they are still elevated above the pre-War scenario, emphasizing the already built-in impact from the first month of the conflict. Airline executives have also warned that even with Iran reopening the Strait of Hormuz, as it announced this morning following the Israel-Lebanon ceasefire, cost impacts on jet fuel will persist due to reduced refining capacity in the Middle East. European airline Ryanair also said price increases from March will likely be passed onto consumers over the course of the summer. United Airlines anticipates that oil prices will remain above $100 per barrel through the end of 2027.

In 1973, the OPEC oil shock led to an increase in jet fuel prices and airline costs. This helped to promote increased fuel efficiency, including the GE Unducted Fan. European airline usage of sustainable aviation fuels has already tripled in 2025 due to the European Union’s 2% blending mandate. Demand for sustainable aviation fuels may increase further as the price gap between crude-based jet fuels and sustainable aviation fuels narrows. While the increase in prices may incentivize fuel efficiencies, the war has also led to increased fuel usage in certain regions due to rerouting. The Middle East and Gulf regions serve as a hub for major long-haul corridors, connecting Europe, Asia, and Africa. As the War in Iran has expanded, airlines have rerouted flights to avoid conflict zones, increasing congestion in alternative routes. Rerouting can increase flight times, decreasing fuel efficiency. Airplanes are also carrying more fuel in case of emergency divergences or in case fuel is not available at their destination. In comparison to the 1973 crisis in Iran, modern air carriers have longer ranges, enabling more flights to be rerouted rather than cancelled.

Impact on Asian and European Airlines

The impact of the cost increases is not equal across geographies due to variation in dependency on jet fuel imports from the Middle East. Airlines in the Asia-Pacific region are the most vulnerable and have already seen large impacts due to their heavy reliance on jet fuel from the Middle East. Korean Air announced it is going into emergency management mode, and Philippines Airlines only has fuel secured through June. Asian airlines have reduced schedules for April and May and some have added jet fuel surcharges to fares.

Around half of Europe’s supply of jet fuel comes from the Gulf region. Analysts have raised concerns about a systemic jet fuel shortage in May and June for European airlines if there is no solution to the current pause in jet fuel supplies moving through the Strait of Hormuz in the next three weeks. The summer travel season is important not only for airline earnings but also for the domestic economies in many popular tourist locations. Airlines for Europe (A4E), an industry group representing European airlines, sent a letter to the European Union in April calling for emergency measures to respond jet fuel shortages as the European Commission plans to propose measures on April 22 in response to the energy shock. The airline’s letter called for joint purchasing of kerosene and a requirement for countries to maintain emergency jet fuel.

In 2022, during the start of Russia’s War with Ukraine, the EU started joint purchasing of natural gas. European Airlines are now calling for a similar joint purchasing for jet fuel inputs. Since 2022, European Airlines have experienced jet fuel prices above the global average due to the Ukraine War (impacts on access to Russian petroleum products) and due to the Israel-Gaza War (reduced capacity in the Red Sea for shipments from the Middle East and Southeast Asia).

Some European airlines including Wizz and Virgin Atlantic have lowered profit expectations, increased ticket prices, and cancelled flights. European airports face varying levels of risk of shortages based on reliance on Gulf jet fuel, existing reserves, and access to alternative supplies. Airports in Paris, Amsterdam, and Copenhagen have already started using their jet fuel reserves, and Italy has raised concerns about fuel shortages and rationing at select airports. European airline Ryanair said while they have secured fuel supplies through mid-May, a continued conflict into May or June will potentially create fuel supply risks in Europe. However, others have projected more confidence. UK Business Secretary Peter Kyle said that the UK is well supplied with fuel and is not worried about shortages.

Impact on US Airlines

Due to access to domestic refineries, US airlines are in a less precarious position but are still impacted by the cost increases. Most US Airlines have not announced ticket price increases due to the conflict. Instead, US airlines, including Alaska Air, American Airlines, Delta Air Lines, and JetBlue Airways have announced increases to checked bag costs. American Airlines is estimating a $400 million increase in Q1 costs as a result of the conflict.

Unlike other US airlines, United Airlines has publicly announced increased fares and cut unprofitable flights as a result of the increase in jet fuel costs. For Q2 and Q3, United is cutting 5 percent of flights from its schedule. In late March United CEO Scott Kirby emphasized that existing high revenues and travel demand will help to offset the crisis. The airline has a goal of fully offsetting an estimated $4.6 billion increase in fuel prices through the strong revenue environment. Before the war, domestic airline prices increased 6 percent in January and 7.1 in February. In the first week of the war (from February 28^th to March 9^th), US airline prices increased 24 percent in comparison to the same week in 2025. In comparison to European airlines, major US carriers do not hedge, a practice in which airlines purchase fuel supplies months in advance at a futures price; this may create more exposure for US airlines if the crisis continues.

The impact of the fuel cost increases not only varies by geography but also varies on the business model and financial strength of airlines. Legacy airlines such as United can pass costs on to consumers with less concern about loss in consumer demand. Low-cost airlines are in a more difficult position when faced with operating cost increases because consumers are more sensitive to price increases; these airlines typically have less financial security to weather cost increases. According to the Royal Aeronautic Society pricing power, network flexibility, and balance sheet strength will be key for airlines remaining resilient during the crisis.

On Friday April 17^th, Iran announced the reopening of the strait during the ceasefire between Isreal and Lebanon. If the ceasefire and strait reopening holds, the crisis will have a more limited impact on airlines as a short-term supply issue. If a prolonged crisis forces airlines to increase airfare or creates further economy-wide disruptions, airlines could see a reduction in consumer demand, such as occurred in 2008 following historic highs in jet fuel prices. At that time, while jet fuel prices normalized in the second half of the year, the global economic recession forced airlines to reduce capacity, introduce new fees, and increase airfares to make up for operational losses. A prolonged conflict risks not only fuel shortages but also impacts on consumer demand which is key for airlines to weather fuel cost increases.