Airlines worldwide are slashing flight schedules and raising fares as jet fuel prices surge past crisis levels. The cuts follow disruptions to Middle East oil supplies and partial closure of the Strait of Hormuz since late February, creating the largest hit to oil flows in decades.
United Airlines became the first major U.S. carrier to announce capacity reductions, cutting approximately 5% of its flight schedule. The cuts mark a turning point for American carriers after weeks of industry warnings about unsustainable fuel costs.
Fuel Prices More Than Double
Jet fuel prices reached $195 per barrel at the end of March, up nearly $100 from late February when conflict escalated. Oil prices have rocketed past $100 a barrel, with some market analysts tracking levels approaching $175.
The financial impact is severe. United CEO Scott Kirby told employees the airline faces an extra $11 billion in annual jet fuel expenses at current prices. For context, United made less than $5 billion in its best year ever.
For freight forwarders, jet fuel shocks rarely stay confined to passenger travel. When airlines cut schedules, belly cargo capacity disappears with them. That immediately tightens supply, pushes rates higher, and forces forwarders to rethink routing strategies almost overnight. Capacity pressure in air freight markets typically appears within weeks of airline schedule reductions.
“The reality is, jet fuel prices have more than doubled in the last three weeks. If prices stayed at this level, it would mean an extra $11B in annual expense just for jet fuel. For perspective, in United’s best year ever, we made less than $5B.”
– Scott Kirby, United Airlines CEO
Flight Cuts Spread Across Continents
Carriers across Europe, Asia and North America are implementing emergency capacity reductions. The cuts focus on marginally profitable routes, off-peak flying and long-haul services that cannot absorb doubled fuel costs.
European Carriers Hit Hard
- Lufthansa is considering grounding up to 40 aircraft until fuel supplies improve
- Scandinavian Airlines is axing more than 1,000 flights across the next few months
- Ryanair CEO Michael O’Leary warns of supply disruptions in Europe by May and June if the war continues
Asian Airlines Cut Deeper
Asian carriers face particularly acute pressure. Vietnam Airlines is cancelling up to 20% of all flights and suspending seven domestic routes. Air New Zealand cut 5% of its total network, removing more than 1,100 flights from its timetable starting in May.
AirAsia slashed 10% of flights and raised fuel surcharges by up to 20%. Overall ticket prices at the carrier have risen 30% to 40% as jet fuel jumped from $90 per barrel before the war to $200 per barrel.
Supply Chain Deepens
The crisis stems from attacks on refineries and export terminals across the Gulf region. Major Saudi, Iranian, Emirati and Qatari facilities have been struck. The war has trapped oil in storage facilities across the Middle East, with crude unable to exit the Strait of Hormuz.
The International Energy Agency predicts oil losses in April will be twice what was lost in March. Regional refinery run reductions of roughly 25% to 40% have been reported in parts of Southeast Asia.
June Goh, senior oil market analyst at Sparta Commodities, notes that jet fuel requires specialised storage, meaning less is stored than other products like gasoline. The UK is the most exposed country in Europe to tightening diesel and jet fuel supply, according to Argus Media.
Airlines Pass Costs to Customers
Carriers are deploying multiple strategies to offset fuel expenses:
- Fuel surcharges: Full-service carriers across Asia and Europe have raised fuel surcharges on long-haul tickets by the equivalent of 30 to 50 euros per round trip
- Baggage fees: U.S. airlines including JetBlue and United lifted checked-bag charges by around $9 to $10 per piece on many routes
- Base fares: All-in economy prices on some Asia to Europe and North America corridors are up by more than 30% compared with early February
More than half of airlines serving certain Asian markets have introduced new fuel surcharges or fare increases since mid-March, according to industry data.
Strategic Cuts and Long-Term Planning
United’s 5% capacity reduction includes roughly 3 percentage points from off-peak flying, 1 point from Chicago O’Hare reductions, and 1 point from suspended service to Tel Aviv and Dubai. The cuts focus on redeye flights and Tuesday, Wednesday and Saturday departures.
Despite the crisis, United plans to continue taking delivery of about 120 new aircraft this year, including 20 Boeing 787s. Another 130 aircraft are due by April 2028. The airline expects to restore its full schedule in the autumn.
“In the short term, that means tactically pruning flying that’s temporarily unprofitable in the face of high oil prices.”
– Scott Kirby, United Airlines CEO
Competitive Advantages Emerge
Delta Air Lines owns an oil refinery in Pennsylvania that provides a buffer during the crisis. CEO Ed Bastian noted the refinery gives Delta “a fairly significant hedge” against fuel price volatility, though it won’t cover the impact entirely.
Well-hedged carriers with domestic refining access face fewer difficulties than smaller airlines buying spot-market fuel. The disparity is creating competitive advantages for larger, integrated carriers.
Market Outlook Remains Bleak
Energy agencies and market consultancies expect prices to stay elevated through at least the second quarter of 2026. United is modelling oil at $175 per barrel and expects prices to remain above $100 through the end of 2027.
The Trump administration has temporarily lifted sanctions on Iranian oil currently stranded at sea, but the gesture has done little to ease immediate supply constraints.
Kirby acknowledged there’s “a good chance it won’t be that bad” but emphasised the need to prepare for worst-case scenarios. Despite the cuts, demand remains strong. United recorded its 10 biggest booked revenue weeks in its history over the past 10 weeks.
Impact on Global Trade
The jet fuel crisis affects more than passenger travel. Air cargo capacity is contracting as belly-hold space disappears with cancelled passenger flights. Freight forwarders face tighter capacity on key lanes and higher rates as airlines prioritise profitable routes.
Emerging-market travellers and tourism-dependent regions are particularly vulnerable. The combination of higher fares, reduced connectivity and cancelled routes threatens economic recovery in regions dependent on air links for trade and tourism.
As the crisis enters its third month, airlines are developing crisis response plans for prolonged. The industry faces difficult choices: burn cash on unprofitable flying, pass unsustainable costs to customers, or cut capacity and concede market share.
