【Iran Crisis】Middle East Conflict Sparks Energy Shortage Concerns; Several Asian Airlines Plan to Raise Ticket Prices or Suspend Flights; Hong Kong Airlines to Increase Fuel Surcharge by up to 150 HKD per Flight Starting Thursday

As conflicts in the Middle East continue to escalate, markets are concerned about the possibility of the most severe oil crisis since the 1970s. Several Asian airlines are beginning to raise ticket prices and implement emergency plans, including suspending some flights.

Take Hong Kong Airlines as an example. The company recently announced that starting March 12, it will adjust its passenger fuel surcharges. Both short-haul and long-haul routes will be affected. Popular destinations in Japan, Korea, Thailand, and Southeast Asia will see an increase from HKD 162 to HKD 212, an additional HKD 50 one-way. Long-haul flights will be increased by HKD 150 per trip, meaning passengers will pay an extra HKD 300 just for fuel surcharges on round-trip tickets.

Additionally, sources say that Indian airlines have recently raised their long-haul fares by about 15% and are considering further increases. Vietnamese state media pointed out that due to heavy reliance on imported aviation fuel, local ticket prices could rise by as much as 70%.

Asian Airlines Unprepared for Oil Price Hedging

Compared to their European and American counterparts, Asian airlines are significantly less prepared for oil price hedging, making them more vulnerable. Some Southeast Asian low-cost carriers have already begun simulating various scenarios to assess whether they need to suspend flights if fuel prices become too high or supply is interrupted.

“Currently, the entire market has hit the panic button,” said June Goh, senior oil analyst at Sparta Commodities. “For Asian airlines with insufficient hedging and previously sold tickets at low prices, the current fuel environment is extremely unfavorable.”

Industry insiders warn that if this situation persists for more than three months, some low-margin budget airlines could face bankruptcy. Deutsche Bank analyst Michael Linenberg also predicted in a report that if the conflict continues, thousands of aircraft worldwide may be forced to suspend operations, and financially weaker airlines could temporarily cease flying.

On Tuesday (the 10th), Air New Zealand announced it would suspend earnings guidance due to volatile fuel prices, which have invalidated assumptions made less than two weeks ago. The company stated: “Unprecedented market volatility has rendered our previous fuel price assumptions invalid. We expect this crisis to significantly impact profits in the second half of the year, so we are suspending our financial guidance for FY2026 until market and operational conditions stabilize.”

These signs reflect the growing potential impact of the conflict on the global airline industry. The conflict, which began over a week ago after the US and Israel launched attacks on Iran, shows no signs of easing. Major airports and airlines in the Middle East are nearly at a standstill, and the threat of disrupted fuel supplies continues to cast uncertainty over global aviation operations.

However, some industry insiders remain cautiously optimistic, believing the conflict may last only a few months rather than years. John Plueger, CEO of Air Lease, said, “I personally think this is a short-term phenomenon… The key point is that the world won’t stop; it might just hit the pause button temporarily.”

Airline Stocks Plunge

Lufthansa CEO Carsten Spohr pointed out that the airline has a relative advantage in fuel hedging strategies. When competitors are forced to raise prices, Lufthansa could gain a competitive edge. He also said the group is increasing capacity to Asia and Africa to fill the gap left by the significant reduction in Middle Eastern airline capacity.

However, analysts generally believe that Asian airline stocks will continue to be highly volatile. As oil prices briefly surged past $100 per barrel, regional airline stocks plummeted on Monday (the 9th). Asiana Airlines hit a 21-year low, the Asia-Pacific Airlines Index reached a five-year low; India’s largest airline, IndiGo’s parent company InterGlobe Aviation, saw its stock plunge over 8% in Mumbai.

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