Rising oil prices force airlines to hike fares and cut routes
The ongoing US-Iran conflict has pushed crude above $100 a barrel, driving up jet fuel costs and prompting airlines to raise ticket prices and trim services.
The seventh month of the US-Iran war has driven crude oil above $100 a barrel, with jet-fuel refining margins reaching $163, up from around $89 before February. Airlines worldwide are responding by lifting ticket prices, cutting routes and confronting sharply higher fuel expenses; Qantas reports a $610 million rise in its fuel bill for the year to June 2026, while Virgin faces a potential $700 million increase in the first half of fiscal 2027.
Both carriers are reviewing seat-capacity and pricing strategies, and Virgin’s hedging of jet-fuel margins has fallen to about 20%. In Australia, pump prices for regular unleaded and diesel have risen 37% and 45% respectively, reflecting the broader commodity surge. Industry observers say the lack of a quick resolution to the Middle-East fighting will keep fuel costs elevated for the remainder of 2026.
Why it matters
Higher oil prices raise travel costs and fuel bills for consumers and airlines worldwide.
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