Industry executives say the spike in fuel prices triggered largely by escalating geopolitical tensions in the Middle East has significantly increased operating expenses, forcing carriers to consider fare hikes and additional surcharges to offset the rising costs.

Jet fuel prices surge amid geopolitical tensions

Jet fuel prices have risen dramatically in recent weeks following the escalation of conflict involving Iran, which has disrupted global oil markets and created fears of supply shortages. Prices that previously hovered around $85–$90 per barrel have surged to roughly $150–$200, according to airline industry data.

Fuel is typically the second-largest expense for airlines after labour, accounting for roughly 20–25% of operating costs, meaning sudden increases can quickly erode profitability.

Executives warn that airlines cannot absorb such increases indefinitely and will ultimately have to pass some of the costs on to consumers through higher fares or fuel surcharges.

Airlines begin raising fares

Several carriers have already taken steps to increase ticket prices.

Air New Zealand said it had implemented “initial fare adjustments,” raising one-way economy tickets by around NZ$10 on domestic routes, NZ$20 on short-haul flights and up to NZ$90 on long-haul routes, while suspending its financial outlook for 2026 due to the uncertainty surrounding fuel markets.

Meanwhile, Qantas Airways confirmed it would raise prices on several international routes, citing rising fuel expenses linked to the Middle East conflict.

Other airlines across Asia and Europe are also reviewing pricing strategies and operational schedules as fuel costs continue climbing.

Route disruptions and longer flights

Beyond higher fuel costs, airlines are also grappling with airspace closures and rerouted flights, particularly across parts of the Middle East.

To avoid potential conflict zones, airlines have been forced to divert flights along longer routes between Asia, Europe and Oceania increasing fuel consumption and operational complexity.

These detours are tightening capacity on key routes and pushing airfare prices higher, especially on long-haul international travel.

Airline profits and stock prices under pressure

The spike in oil prices has also rattled financial markets, with airline stocks falling sharply amid concerns that rising fuel costs could reduce profitability and dampen travel demand.

Shares of several major U.S. carriers including American Airlines, United Airlines, Delta Air Lines and Southwest Airlines have declined as investors assess the potential impact of higher operating expenses on the industry.

Analysts estimate that the largest U.S. airlines could face billions of dollars in additional annual fuel costs if prices remain elevated throughout the year.

Balancing fares and passenger demand

Airlines now face a delicate balancing act: raising ticket prices enough to offset higher costs without discouraging travelers.

Industry analysts say carriers will likely introduce gradual fare increases or fuel surcharges, rather than immediate large price hikes, to avoid weakening demand.

“Airlines will try to recover the extra costs carefully,” said one aviation analyst, noting that even small increases per ticket can help offset large increases in fuel expenses across thousands of daily flights.

Travel outlook remains uncertain

Despite the rising costs, global travel demand has remained relatively strong so far, with some international routes still reporting high occupancy levels.

However, aviation experts warn that if fuel prices continue climbing or geopolitical tensions worsen, the airline industry could face reduced passenger demand, more cancellations and slower growth in global tourism.

For now, travelers planning flights later this year may want to book early, as airlines continue to adjust fares in response to one of the most volatile fuel markets the industry has seen in years.

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The strike, led by the flight attendants’ union, is the latest development in a tense labour dispute over wages and working conditions. Among the union’s demands are higher salaries and compensation for work performed while aircraft are on the ground  a point the union says has long gone unaddressed.

Travel Disruption Across the Country

The work stoppage affects all Air Canada flights, including those operated by its low-cost subsidiary Air Canada Rouge. The airline issued a notice advising customers not to travel to the airport unless flying with another carrier.

“We regret the impact this strike will have on our customers,” said an Air Canada spokesperson. “We are working to assist passengers and provide rebooking options where possible.”

The airline has not given a timeline for when operations will resume.

Government Urges Talks to Resume

Federal Jobs Minister Patty Hajdu weighed in on Saturday, urging both Air Canada and the union to return to negotiations.

“I’m calling on both parties to get back to the table and finish this deal,” Hajdu said. “Canadians need reliable air service, and workers deserve fair treatment.”

The labour dispute follows months of negotiations that have so far failed to yield an agreement. The union had previously warned of strike action if a new contract was not reached by mid-August.

What Passengers Need to Know

Affected travelers are being asked to check their flight status on Air Canada’s website or contact the airline directly. Officials have warned that airport terminals could face crowding and delays, even as planes remain grounded.

Industry Impact

The strike comes at the height of Canada’s summer travel season, when airports are typically at their busiest. Analysts warn that the work stoppage could have a ripple effect across the aviation and tourism sectors.

Ahmedabad, June 12, 2025
In a devastating aviation tragedy, Air India Flight AI171, a Boeing 787-8 Dreamliner, crashed shortly after departing from Sardar Vallabhbhai Patel International Airport in Ahmedabad. The flight was en route to London Gatwick Airport, carrying 242 individuals, including 230 passengers and 12 crew members.

The aircraft took off at 1:38 PM IST and lost contact with air traffic control approximately five minutes later. Eyewitnesses reported hearing multiple explosions followed by thick plumes of smoke as the plane descended into the Meghani Nagar area, crashing near a medical college hostel.

Casualties and Nationalities

As of the latest reports, at least 133 fatalities have been confirmed. The passengers included:

• 169 Indian nationals

• 53 British nationals

• 7 Portuguese nationals

• 1 Canadian national

Among those believed to be on board is Vijay Rupani, the former Chief Minister of Gujarat.

Rescue and Emergency Response

Emergency services, including fire engines, ambulances, and teams from the National Disaster Response Force (NDRF), were promptly deployed to the crash site. The Directorate General of Civil Aviation (DGCA) and Air India have initiated investigations into the cause of the crash.

Aircraft and Flight Details

The aircraft involved, registered VT-ANB, was an 11-year-old Boeing 787-8 Dreamliner. It had its first flight on December 14, 2013, and was delivered to Air India on January 28, 2014.

Government Reactions

• Indian Prime Minister Narendra Modi expressed deep sorrow over the incident, stating, “The tragedy in Ahmedabad has stunned and saddened us. It is heartbreaking beyond words.” He assured that authorities are working to assist those affected.

• UK Prime Minister Keir Starmer called the crash “devastating” and extended condolences to the victims’ families.

Investigation and Safety Concerns

The crash has raised concerns about the safety of the Boeing 787-8 Dreamliner, as this is the first fatal crash involving this aircraft model since its introduction in 2011. Investigations are ongoing to determine the cause of the crash, with both Indian and international aviation authorities involved.