Passengers booking flights from the UAE and broader Gulf region are bracing for significantly higher airfares, with analysts warning of increases of at least 30 percent following a dramatic surge in jet fuel costs tied to the ongoing US-Israel-Iran conflict.
In a Khaleej Times report, James Noel-Beswick, head of commodities at Sparta, pointed to the Singapore kerosene benchmark as the clearest indicator of the scale of the problem. The measure, which tracks how much more expensive jet fuel is compared to crude oil, climbed from roughly $22 per barrel before the conflict to over $96 per barrel last Thursday.
“That is not a market fluctuation; it is a structural dislocation. To put it another way, the kerosene price itself has moved from around $91 per barrel to approximately $190 per barrel (as of Thursday). Crude oil has risen sharply, but jet fuel has risen by a multiple of that. The two markets are no longer moving in the same direction at the same speed,” he said.
Tehran’s closure of the Strait of Hormuz pushed oil prices past $100 per barrel last week, according to Khaleej Times, which first reported the fare projections. Because jet fuel normally makes up about a third of an airline’s total operating costs, the near-doubling of the kerosene benchmark has set off a round of emergency surcharges across regional and Asian carriers.
Noel-Beswick said the math leaves little room for dispute. With the Singapore kerosene benchmark having roughly doubled, he said the arithmetic points clearly toward a minimum airfare increase in the region of 30 percent and potentially considerably more on routes where supply constraints are acute or competition is reduced by groundings and cancellations.
“Travellers on routes from the UAE and GCC to London, New York, Tokyo, Mumbai and Riyadh should all be planning on the basis of materially higher fares than they have been accustomed to,” he added.
Saj Ahmad, chief analyst at London-based StrategicAero Research, noted that pricing pressure on GCC routes — particularly out of key UK markets — had already been building since hostilities broke out. He identified premium long-haul routes such as Dubai to London, New York, Mumbai and Riyadh as those most likely to absorb the steepest increases, with economy fares on such corridors potentially rising between 10 and 20 percent.
“While there is talk of the war ending, this is an open question as to when, so while that uncertainty remains, airlines will continue to hike fares overall to reflect the higher costs of oil — if only to partially offset lost revenue from greatly diminished flight operations,” Ahmad said.
Airports and airlines across the UAE and GCC have resumed limited operations to major destinations. Eid Al Fitr, which falls later this week in the UAE and Gulf region, has added further upward pressure on fares at an already strained moment for the aviation sector.
