Asia-Pacific airlines cancel 1,100 flights, add $200 surcharges as jet fuel hits $200

Quick summary

Airlines across Asia-Pacific are implementing emergency flight cancellations and fuel surcharges as jet fuel prices approach US$200 per barrel — nearly triple the cost from earlier this year. Air New Zealand has cancelled approximately 1,100 flights through early May, affecting 44,000 passengers, while Cathay Pacific suspended Dubai and Riyadh services through June 30. Air India introduced phased surcharges reaching US$200 for North America and Australia routes starting March 18, and AirAsia fares have surged 40% as low-cost carriers without hedging protection absorb the full cost spike.

Air China suspended Chengdu–Kuala Lumpur flights through June 30, and Taiwan carriers are cutting an average of 52 international flights weekly in May. The Strait of Hormuz closure has delayed jet fuel tanker deliveries to Asian ports by weeks, creating supply shortages that compound the price crisis.

Fuel crisis forces carriers into defensive posture

The US-Israel-Iran conflict has closed the Strait of Hormuz, cutting off 90% of Gulf oil transit and sending jet fuel refining costs in Asia up 400% — from US$22 per barrel to over US$115. Tankers now take weeks to reach Asian ports via alternative routes, creating supply shortages that have pushed aviation fuel to account for up to 40% of an airline’s operating expenses.

Air New Zealand took the most aggressive action, cancelling roughly 5% of its total schedule through early May. The cuts primarily target off-peak domestic rotations to consolidate fuel use. The carrier has also implemented immediate fare increases, adding NZ$10 to domestic tickets and up to NZ$90 (US$52) for longhaul services. While heavily hedged against crude oil, the airline remains exposed to the cost of refining oil into jet fuel — the component that has spiked most dramatically.

Cathay Pacific suspended flights to Dubai and Riyadh through June 30 and will cut approximately 2% of flights, mostly regional routes operated by Airbus A330 aircraft, between May 16 and June 30. The carrier is adding frequencies to London and Zurich to meet redirected demand as travelers avoid Middle Eastern transit hubs. European flights are reaching over 90% capacity as passengers reroute through safer corridors.

Air India and Air India Express introduced a three-phase surcharge expansion. Starting March 12, a new Rs 399 (US$4.30) fee applies to all domestic routes, while surcharges to Southeast Asia rose to between US$40 and US$60. A second phase on March 18 saw longhaul surcharges jump to US$125 for Europe and US$200 for North America and Australia, with further adjustments for Hong Kong and Japan expected shortly.

Air China suspended Chengdu–Kuala Lumpur flights through June 30, part of a broader pattern of China–Southeast Asia cancellations as carriers prioritize profitable longhaul routes over regional services. Taiwan carriers are cutting an average of 52 international flights weekly in May due to fuel costs, while AirAsia fares have surged 40% and fuel surcharges increased 20% — low-cost carriers without hedging programs are absorbing the full cost spike.

How the fuel supply chain broke

The Strait of Hormuz closure has disrupted the physical delivery of jet fuel to Asia, not just the price. Tankers that normally transit the strait in days now take weeks to reach Asian ports via alternative routes around Africa or through the Suez Canal — assuming they can secure passage at all. Asian refineries, which depend on Gulf crude feedstock, are running at reduced capacity or switching to costlier alternatives.

Airlines hedge against crude oil price fluctuations, but most hedging programs do not cover the cost of refining crude into jet fuel — the “crack spread” that has exploded from US$22 to over US$115 per barrel in recent weeks. This leaves carriers exposed even when crude oil hedges are in place. Singapore Airlines, regarded as having one of the more robust fuel hedging programs, has suspended Middle East services but maintained its longhaul network using Airbus A350 aircraft.

In 2019, Strait of Hormuz tensions during Iran-US tanker seizures in June and July caused jet fuel prices to rise 20–30% in Asia. Cathay Pacific added surcharges of US$20–50 on longhaul routes and cut 5% of regional capacity temporarily, while Qantas hiked fares 3–5% without major cancellations. The current crisis represents an escalation — US-Israel direct strikes versus prior proxy conflicts — with fuel costs rising 400% instead of 30%.

What to do if your flight is affected

Airlines are implementing extended cancellations and surcharges in response to the prolonged fuel crisis, with capacity cuts and fare increases expected to continue through June.

• Check flight status immediately — Air New Zealand domestic cancellations through May at airnewzealand.co.nz/flight-status, Cathay Pacific Dubai/Riyadh suspensions through June 30 at flights.cathaypacific.com.
• Claim refunds or rebooking — EU/UK departures qualify for €250–600 under EU261/UK261 for cancellations over three hours if airline fault. US passengers receive refunds within seven days under DOT rules. Australia/New Zealand passengers have rebooking or refund rights under ACL/CCFA.
• Reroute via Europe — Cathay Pacific added London and Zurich frequencies, Malaysia Airlines increased widebody capacity between Asia and Europe. Avoid Middle Eastern hubs (Dubai, Riyadh, Doha) where suspensions remain in effect.
• Switch to full-service carriers — Low-cost carriers like AirAsia without hedging programs face 40% fare surges. Full-service carriers with hedging protection offer more stable pricing, though surcharges still apply.
• Monitor China–Southeast Asia alternatives — Air China Chengdu–Kuala Lumpur suspended through June 30. Search China Eastern, China Southern, or Singapore Airlines for replacement routings.

Watch: Strait of Hormuz reopening timeline — if delayed beyond May 1, expect 10–20% more Asia-Pacific capacity cuts and surcharges doubling.

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