Global carriers hike prices and trim capacity amid fuel spike

The global aviation industry is facing a significant financial challenge as jet fuel prices have surged from a range of $85 to $90 per barrel to between $150 and $200 per barrel in recent weeks. This spike, driven by the geopolitical conflict involving the United States, Israel, and Iran, has forced carriers to revise their profit outlooks and increase passenger fees, given that fuel can account for up to 25% of total operating expenses. Carriers across North America, Europe, and the Asia-Pacific region are implementing various strategies to mitigate the impact of these rising costs. In North America, AIR CANADA in Canada is trimming its daily service to New York through late 2026, while ALASKA AIR GROUP INC has withdrawn its full-year profit forecast due to margin pressure. AMERICAN AIRLINES GROUP INC and SOUTHWEST AIRLINES CO have both increased checked baggage fees for domestic and short-haul international flights. DELTA AIR LINES INC has also raised baggage fees and cut its capacity growth plans, forecasting profits below previous expectations. FRONTIER GROUP HOLDINGS INC is currently reviewing its annual outlook, while UNITED AIRLINES HOLDINGS INC is cutting unprofitable routes and raising fees for travel to Mexico, Canada, and Latin America. JETBLUE AIRWAYS CORP recently secured a $500 million debt financing agreement to bolster its recovery efforts. Spirit Airlines has also reportedly sought emergency funding to avoid potential liquidation. European carriers are responding with similar measures. AEGEAN AIRLINES in Greece expects its first-quarter results to be notably affected by fuel costs and suspended Middle East flights. AIR FRANCE-KLM is raising long-haul ticket prices, while its arm in the Netherlands has cancelled 160 European flights. EASYJET PLC in the United Kingdom warned of a larger half-year loss, and Lufthansa is grounding 27 short-haul planes and reducing its winter schedule. Other regional responses include a new pricing policy from Volotea in Spain, price hikes by TAP in Portugal, and temporary surcharges on routes between Turkey and Europe by SunExpress. Scandinavian carrier SAS has also cancelled 1,000 flights due to the price surge, while British Airways-owner IAG is relying on its fuel hedges to avoid immediate fare increases. In the Asia-Pacific region, AIRASIA X BHD in Malaysia has cut 10% of its flights across the group. AIR NEW ZEALAND LTD in New Zealand was one of the first to hike fares and has suspended its full-year earnings forecast. In South Korea, ASIANA AIRLINES is slashing 22 flights, while KOREAN AIR LINES CO LTD has entered emergency management. TWAY AIR CO LTD is planning unpaid furloughs for cabin crew. CATHAY PACIFIC AIRWAYS in Hong Kong is seeking to raise HK$2 billion through bond issuance, while Greater Bay Airlines and Hong Kong Airlines have raised fuel surcharges on most routes. CEBU AIR INC in the Philippines and THAI AIRWAYS INTERNATIONAL in Thailand are both reviewing pricing and network strategies to mitigate costs. CHINA EASTERN AIRLINES CO-H in China and Spring Airlines have both increased domestic fuel surcharges, with some adjustments excluding routes to Japan. In India, INTERGLOBE AVIATION LTD and Air India have introduced new fuel charges on domestic and international flights. Similar fare increases have been implemented in Pakistan, and surcharges have risen for flights to the Maldives, Bangladesh, and Nepal. In Oceania, QANTAS AIRWAYS LTD in Australia delayed a planned share buyback as its fuel bill is expected to rise significantly. VIRGIN AUSTRALIA HOLDINGS LT also projected a substantial increase in fuel costs and a minor reduction in capacity. In Vietnam, VIETJET AVIATION JSC and VIETNAM AIRLINES JSC are adjusting flight frequencies, with the latter requesting government assistance regarding environmental taxes on jet fuel. Virgin Atlantic is also adding surcharges but expects to struggle with profitability this year.