Jet fuel prices double in two weeks, forcing airlines to cut capacity and raise fares

Jet fuel prices have doubled in two weeks due to the Iran war, with US prices hitting $3.99 per gallon on March 28 from $2.50 pre-conflict. Cathay Pacific implemented fuel surcharges across all routes effective March 18, Air India added up to $50 roundtrip surcharges to Europe, North America, and Australia, and Vietnam Airlines will suspend 23 weekly domestic flights starting April 1 due to Jet A-1 shortages. United Airlines plans a 5% capacity cut short-term, with the industry facing a potential $11 billion annual cost increase if prices hold.

The Strait of Hormuz — which handles one-fifth of global oil supply — remains blocked by Iranian attacks on ships and infrastructure. Fares on long-haul Asia-Pacific routes from North America, Europe, and Australasia are rising 5–15% as carriers pass costs through, with Air France-KLM already adding approximately 50 euros to economy roundtrips.

Iran’s escalating conflict with US-backed forces has severed a critical artery in global aviation fuel supply, forcing Asian carriers to raise fares and cut capacity as jet fuel costs spike to levels not seen since the 2022 energy crisis.

The immediate trigger: Iranian attacks on oil tankers and refinery infrastructure in the Strait of Hormuz have halted traffic through the waterway, which normally carries 20% of the world’s oil exports. Refineries serving Asia-Pacific aviation hubs are operating at reduced capacity, and spot prices for Jet A-1 fuel have doubled in 14 days.

Cathay Pacific moved first, updating fuel surcharges across its entire network on March 18 — a rare system-wide adjustment that signals the airline expects sustained high costs. Air India followed with surcharges up to $50 roundtrip on routes to Europe, North America, and Australia. AirAsia raised base ticket prices and added temporary surcharges without specifying amounts, while Vietnam Airlines took the more drastic step of cutting 23 weekly domestic flights starting April 1 due to physical fuel shortages at Vietnamese airports.

How the fuel crisis is reshaping Asia-Pacific routes

US jet fuel averaged $3.99 per gallon on March 28, up from $2.50 two weeks earlier, according to the Argus index. That 60% jump translates directly into operating costs — fuel typically accounts for 20–25% of an airline’s total expenses, meaning a doubling of fuel prices adds 10–12 percentage points to the cost base overnight.

For long-haul operators, the math is brutal. A Boeing 777-300ER flying Los Angeles to Hong Kong burns approximately 20,000 gallons of fuel. At pre-war prices, that’s $50,000 in fuel cost per flight. At current prices, it’s $80,000 — a $30,000 increase that must be recovered through fares or absorbed as loss.

United Airlines announced a 5% capacity reduction in the short term, citing the doubled fuel costs as adding a potential $11 billion to annual expenses if prices remain elevated. The carrier has not specified which routes will see cuts, but trans-Pacific services — already operating on thin margins due to competitive pressure from Chinese carriers — are likely targets.

Chinese airlines are in a particularly vulnerable position. One unnamed Chinese carrier held 500,000 barrels of jet fuel hedges as of December 31, 2025, set to expire in 2026, according to industry filings reviewed by Fortune. Those hedges — contracts locking in fuel at lower prices — will run out just as the crisis deepens, leaving carriers fully exposed to spot market prices.

Why this matters for travelers booking Asia-Pacific flights

The mechanism is straightforward but the timeline varies by carrier. When jet fuel doubles, airlines have three options: absorb the cost (unsustainable beyond a few weeks), cut capacity (reduces revenue but limits losses), or raise fares (immediate but risks demand destruction).

Most are doing all three simultaneously. Cathay Pacific and Air India added explicit fuel surcharges — a transparent approach common in Asia and Europe that allows carriers to adjust quickly without repricing every fare in the system. US carriers like United embed fuel costs into base fares, which means the increases are less visible but equally real. Chinese carriers, which have been undercutting European and North American airlines by 30–40% on Europe-Asia routes, now face a structural cost disadvantage as their fuel hedges expire.

For travelers, the impact appears in stages. Surcharges hit first — within 24–48 hours of announcement, as seen with Cathay Pacific on March 18. Base fare increases follow 2–4 weeks later as airlines reprice inventory. Capacity cuts come last, typically 4–8 weeks out, as carriers finalize summer schedules. Vietnam Airlines‘ April 1 cuts are unusually fast, driven by physical fuel shortages rather than just cost.

The historical precedent from 2019 suggests surcharges could rise another 10–20% if the conflict extends beyond six weeks. But the 2019 episode also showed that prices stabilize quickly once geopolitical tensions ease — surcharges dropped within 30 days of de-escalation.

Lock in fares now or wait for de-escalation

The window to book at pre-surcharge prices closed on March 18 for most carriers. Current fares reflect the first wave of increases, but not the full cost if fuel remains at $4 per gallon through summer.

• Book within 48 hours if traveling April–June and your route involves Cathay Pacific, Air India, Air France-KLM, or AirAsia — surcharges are live but base fares have not fully adjusted yet.
• Consider alternative routings via Tokyo (ANA, Japan Airlines) or Seoul (Korean Air) — neither carrier has announced surcharges and both avoid Middle East airspace entirely on Pacific routes.
• Monitor Chinese carriers (Air China, China Eastern, China Southern) — they still price 30–40% below European carriers on Europe-Asia routes, but that gap will narrow as fuel hedges expire. Current pricing data shows €550–700 roundtrips from Europe to China versus €1,000+ on Lufthansa and Air France, but expect that spread to compress by 20–30% if fuel stays elevated.
• Avoid Vietnam domestic flights April 1–14 — the 23 weekly cancellations will cascade into delays and rebookings. Use high-speed rail for short hops like Ho Chi Minh City to Phu Quoc if schedules allow.
• Check fare rules before booking — some airlines allow free changes if booked before surcharges were announced. Cathay Pacific and Air India tickets issued before March 18 are not subject to the new surcharges if the travel dates remain unchanged.

Watch: Q2 2026 earnings from Air China and China Eastern — if fuel expenses exceed 30% of total costs (versus 20–25% typical), expect 10–20% capacity cuts on North America, Europe, and Asia-Pacific routes by July.