Cathay Pacific Nearly Doubles Fuel Surcharge Amid Iran War Crisis Driving Oil Prices Up

Cathay Pacific Airways is preparing to nearly double its fuel surcharge on all flight routes after the Iran war crisis caused a sharp rise in jet fuel prices, affecting airlines worldwide and prompting ticket price increases.

Foreign media reported that Cathay Pacific Airways, Hong Kong's flag carrier, issued a statement today (12 Mar) announcing an increase in fuel surcharges on nearly all routes effective from 18 March. This follows a near doubling of jet fuel prices due to the Iran war that began on 28 February. The airline said the adjustment follows a predefined pricing mechanism, detailing the surcharge increases as follows.

• • Short-haul routes: increased to HKD 290 (approximately THB 1,180) from HKD 142 (approximately THB 578).
  • Medium-haul routes: increased to HKD 541 (approximately THB 2,200) from HKD 264 (approximately THB 1,070).
  • Long-haul routes: more than doubled to HKD 1,164 (approximately THB 4,700) from HKD 569 (approximately THB 2,300).

The airline stated it regularly reviews fuel surcharges monthly to align with global jet fuel market prices.

The Middle East war crisis has caused a sharp spike in global energy prices, especially oil and natural gas, following the Islamic Revolutionary Guard Corps (IRGC) threat to close the Strait of Hormuz, a vital energy shipping route. This led to a rapid increase in average jet fuel prices worldwide. Platts reported that on Monday (9 Mar), prices surged to USD 173.91 per barrel, equivalent to about THB 5,500.

This situation has also impacted other airlines globally. Hong Kong Airlines announced a fuel surcharge increase of up to 35.2%, effective today (12 Mar).

Additionally, Australia’s Qantas Airways and Air New Zealand are also preparing to raise international airfare prices within this week, while Thailand’s flag carrier, Thai Airways International Public Company Limited, reported the necessity to increase fares by approximately 10% to 15%.

Meanwhile, Vietnam Airlines has requested government assistance to exempt environmental taxes on aviation fuel to help reduce fuel cost burdens.

However, some European airlines are better positioned to handle the crisis short-term due to hedging agreements securing fixed fuel prices. Germany’s Lufthansa said it has secured 80% of its annual fuel needs. Air France-KLM locked in 70% of prices for the first two quarters and 60% for the following quarter. Similarly, Ireland’s low-cost carrier Ryanair has also hedged a high proportion of its fuel requirements.

Conversely, SAS, Scandinavia’s largest airline, has been forced to announce unavoidable temporary fare increases due to sudden soaring fuel costs.

. CNA

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