JEDDAH: Military actions by the US and Israel against Iran have shaken up energy markets around the world, causing jet fuel prices to rise rapidly and airlines around the world to raise their fares and add fuel surcharges.
Before the recent strikes, jet fuel was selling for about $85 to $90 per barrel. In the last several days, it has shot up to $150 to $200 per barrel, which shows how big the cost shock is. According to Reuters, several major airlines, including Qantas Airways in Australia, Scandinavian Airlines in Scandinavia, and Air New Zealand, announced on March 10 that they would raise ticket prices. They said that the price hikes were due to a sharp jump in fuel costs caused by the crisis in the Middle East. Air India and Air Chathams also joined these.
Khaled Ramadan, an economist and chairman of the International Center for Strategic Studies in Cairo, told Arab News that several airlines have raised their prices and stopped making financial forecasts because fuel expenses make up 20 to 30 percent of their operating costs.
He stated that airline costs could rise by 15 to 20 percent on international routes over the next few months. This is because airspace closures force planes to take longer routes, adding hours to flights and increasing fuel consumption. He also added that low-cost carriers in Asia and US airlines that aren’t hedged are under the most margin pressure.
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