Most of Asia’s airlines don’t hedge jet fuel, which means they are more vulnerable to price increases. Some investors believe airlines may seek to boost fuel surcharges as a way to cope, analysts at Citigroup Inc.
Many US carriers have been able to cover the increased fuel costs so far - but only by passing them along to travelers in the form of higher ares.
Spot jet fuel prices in New York have soared more than 80% this year, though prices vary from region to region depending on refining costs and local taxes. For some budget airlines, it can be as high as 50%. Jet fuel now represents as much as 38% of an average airline’s costs, up from 27% in the years leading to 2019. Russia’s invasion of Ukraine has exacerbated a steady rise in crude oil prices over the past 18 months. With fewer planes in the skies, there are fewer seats to meet the recovery in demand, which in turn has pushed up fares. British Airways Plc doesn’t even fly to Hong Kong at the moment. That’s left people considering lengthy journeys with one or more stopovers, whereas before they might have flown direct. “We’re just in June, so it’s not like turning on the tap.”Ĭarriers also scaled down their networks during Covid, none more so than Cathay, which has been hemmed in by Hong Kong’s onerous travel and quarantine rules. The pinch is most acute in Asia, which was the slowest to ease restrictions, and as China, the biggest market in the region, remains essentially closed.Īfter navigating varied and changing government policies for the past two years, it will take time for airlines to rebuild fleets given that many restrictions only eased in May, said Subhas Menon, director general of the Association of Asia Pacific Airlines. That’s particularly true for giant aircraft like Airbus SE’s A380 superjumbos and Boeing Co.’s older 747-8s, as airlines turn to more fuel-efficient models like A350s and 787 Dreamliners. Increasingly, travelers are booking tickets months in advance as they’re worried about the cost of buying at the last minute, said David Mann, chief economist for Asia Pacific, Middle East and Africa at the institute.Ĭarriers are cautious about bringing back all their idled jets, even though most countries have eased cross-border restrictions. “It’s really amazing that an economy seat ticket would cost you so much.”Ī Mastercard Economics Institute study found the cost of flying from Singapore was on average 27% higher in April than in 2019, while flights from Australia were 20% more. That used to cost about S$2,000, she said. Her company paid S$5,000 ($3632) for a colleague’s return trip with Singapore Airlines Ltd. “Ticket prices are really expensive these days,” said Jacqueline Khoo, who works in tourism. Direct flights between New York and London around the same time cost more than $2,000 in economy. in late June turn up prices as high as HK$42,051 ($5,360), which is more than five times the typical cost before the pandemic. Searches for a return economy-class ticket between Hong Kong and London on Cathay Pacific Airways Ltd. The trend is across geographies, though some places are more squeezed than others.
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