Airlines facing the full impact of high fuel prices would have to charge an average of USD200 in surcharges on long-haul flights to recover extra costs, says global firm Alton Aviation Consultancy.
The continued uncertainty around when critical oil and jet fuel flows via the Strait of Hormuz will fully resume means, more than ever, airlines must ensure they are delivering a robust approach to fuel cost mitigation across operational, network, and fleet decisions.
The global average fuel price according to IATA was just over USD162 per barrel in mid-May, a 71% increase over prices at the end of Jan. ”Contextualising this on a per passenger basis, we estimate that for unhedged airlines to fully pass on these fuel cost increases, fares or surcharges nearing US200 one-way per passenger on long-haul routes would be required,’’ says Alton.
Short-haul services will likely see less material increases due to a smaller proportion of fuel costs among other direct operating costs for the flight. However, it says, these small increases can still impact demand, particularly for price-sensitive passengers, who are the core customer segment for many short haul low cost carriers globally.
Many airlines have trimmed or consolidated their schedules since the 28 Feb attack on Iran and although fuel prices are fluctuating according to the prospects of peace, they still remain elevated.
. . . Analysis Needed
Alton says carriers should conduct a route-level fuel sensitivity analysis to identify routes that become uneconomic under differing fuel price scenarios.
This analysis should incorporate fuel price assumptions with varying timelines to normalisation, expected fuel cost recovery via fare increases, demand response, connecting traffic value, and strategic relevance.
Routes that appear profitable under normal fuel assumptions may become marginal when fuel prices rise. Conversely, some routes may remain strategically justified because they support hub connectivity, premium traffic, or longterm market position when considering fuel cost exposure versus key competitors, says Alton.
Finally, sustained high fuel prices can alter strategic priorities, accelerating decisions around fleet renewal, network pruning, and adjustments to planned network growth. To address this challenge, the most successful airlines will be those that treat fuel efficiency as an enterprise-wide operating discipline rather than a narrow approach.
