Two major airlines cut flights and hike fares as fuel prices surge

Air India and Air New Zealand announced they will cut flights and hike fares as jet fuel prices surge due to the US-Israeli war with Iran.

Many airlines around the world have had to take emergency measures to counter the rising cost of fuel, which typically makes up 20-40% of their operating costs.

Last week, the benchmark European jet fuel price hit an all-time high of $1,838 (£1,387) per tonne, compared with $831 before the war began.

Analysts warned that travellers should expect further ticket price rises and more cancelled flights as the conflict continues.

The Gulf is a major source of aviation fuel, accounting for about 50% of Europe's imports. The bulk of it comes through the Strait of Hormuz, which Iran has effectively closed in response to US and Israeli attacks.

The increase in jet fuel prices reflects the role Middle Eastern refineries play in supplies. The Al-Zour refinery in Kuwait alone provides roughly 10% of Europe's jet fuel imports, according to Energy Intelligence.

Air New Zealand's cancellations are expected to hit routes in and out of Auckland, Wellington and Christchurch, with flights to smaller airports unchanged.

The airline, which had already cut some flights last month, said on Tuesday the "vast majority" of customers affected by the cancellations were being offered alternative flights on the same day.

"Like airlines globally, we're experiencing jet fuel prices that are more than double what they would usually be" a spokesperson said.

Meanwhile, Air India said it would change the fuel surcharge on its domestic flights from a flat fee to one based on the distance of the flight.

It also increased its surcharges for international flights due to what it said was "one of the most challenging fuel cost environments that airlines globally have faced in recent years".

Many airlines in Asia have been trimming services and raising fares to cope with the situation. Major economies, including Japan and South Korea, have been particularly affected by the disruptions as they are heavily reliant on energy from the Middle East.

Last week, China Eastern Airlines said it was raising surcharges for domestic flights while Korean Air said it was moving into emergency management mode.

Airlines globally have also been taking action. United Airlines in the US and Scandinavia's SAS are among those to have cut flights and increased ticket prices.

Air France-KLM has said it will lift fares for long-haul journeys, while Cathay Pacific is raising its fuel surcharge.

British Airways owner IAG and EasyJet have been able to hold off on either measure so far as they are buying their fuel at a price fixed before the war began.

However, Ryanair Michael O'Leary told Sky News last week that jet fuel supplies could start to be disrupted in May if the conflict continued.

Analysts told the BBC that rising ticket fares and flight cancellations are likely to continue.

"Starting from an already tight market, the current lack of Middle East jet fuel exports is worsening the situation," said Mick Strautmann, an analyst at data firm Vortexa.

"Given global jet fuel exports are currently at their lowest point in four years, the same level of air travel demand will likely not be sustainable if disruptions persist, meaning airlines will likely have to increase prices further, and reduce the number of flights," he said.

He added that this will be "more and more likely" as peak summer travel season summer approaches for many parts of the world.

However, despite the tightness of supply, George Shaw, senior insight analyst at trade intellegnce firm Kpler said shortages were still a way off.

"Europe is not close to running out, as jet fuel is produced domestically and generally April should be manageable in terms of stocks," he said, but added that there may be "some localised issues" in May as the drop in imports is "more keenly felt".