Financial Impact of Middle East Conflict Felt by Airlines and Passengers Alike

ORLANDO, Fla. — If you’re eyeing a late spring or summer getaway and still haven’t secured your flight tickets, brace yourself for some unwelcome news. Airlines are hiking ticket prices while also trimming their short-term flight schedules.

And that’s just the beginning.

Travelers are also facing increasing baggage fees, alongside the reappearance of fuel surcharges. These changes are directly linked to the escalating conflict in the Middle East, which has caused aviation fuel prices to nearly double since the conflict erupted on February 28, 2026.

Fuel is a major expense for airlines, second only to labor costs. When fuel prices spike, airlines are forced to make rapid adjustments:

• Just last week, Qantas revealed plans to elevate ticket prices to counterbalance the rising fuel expenses. The airline anticipates its 2026 fuel expenditures will soar beyond $3 billion AUD, a significant leap from their earlier projection of $2.2 billion AUD. In response to these challenges, Qantas is also scaling back on unprofitable domestic and international routes.

• Air New Zealand said last month it was shedding 1,100 flights (about 5% of its routes) over a two-month period. Fares are up between $10 and $20 domestically and $90 for some long-haul flights.
• Norwegian low-cost airline Norse Atlantic Airways has eliminated international service on three routes: Los Angeles and London, Los Angeles and Paris, and Los Angeles and Rome.

Interestingly, the airline states the policy is a two-way street, and passengers could see a refund if fuel prices drop.

Are airlines running out of fuel?

An interesting point to drill down on in KLM’s announcement is this: the mention of a ,. Though KLM stated they have enough fuel for their operations, other airlines (and regions) may not be as fortunate.

Last week, Fatih Birol, Executive Director of the International Energy Agency, stated there could be significant flight cancellations soon if oil supplies from the Middle East weren’t restored. Specifically, Birol told the Associated Press that Europe had “maybe 6 weeks of jet fuel left,” and added that the shortage is “the largest energy crisis we have ever faced.” A similar warning from the Airports Council International Europe (ACI Europe) was even more dire, saying the region could begin feeling the effects of jet fuel shortages within about three weeks.

Europe produces most of its own jet fuel, but about a third is imported. Most of those imports (about 75% or roughly 375,000 barrels a day) came from the Middle East. Though Europe has about six weeks of jet fuel on hand, most major hubs have only about 8 to 10 days of fuel on hand. ACI Europe estimates that over 200,000 barrels of jet fuel make their way to Europe from Kuwait and Saudi Arabia every day. Since the war began, ACI reports that “no significant cargoes have reached Europe.”

Things in the U.S. and Canada are different.

A sidebar explainer on the U.S. and our oil

The U.S. exports more oil and refined fuels than it imports. In fact, we are the biggest oil producer in the world (surprise!) and one of the world’s largest exporters.

Logically, you might think that if we have so much oil, it doesn’t matter what goes on overseas – we can keep everything here internal and not be influenced by outside conflicts.

The funny thing about logic? Sometimes, it’s not logical. Two factors trip us up.

First, it’s about the type of oil, not the amount.

The U.S. has lots of oil, just not the right kind. Years ago, a majority of our refineries were set up to process what’s known as heavy crude oil, oil usually imported from Canada (surprise number 2!) with a small share coming from the Middle East.

The U.S. does produce some heavy crude, but most of our oil is ,pumped from shale fields in places like Texas, Oklahoma, and North Dakota is light sweet crude. Light sweet crude can be refined into gasoline and jet fuel (kerosene), but as stated, most of our refineries are set up for the other type of oil, heavy crude.

Second, we don’t set our own prices.

Oil is traded on the global market, not on a local market. That means no matter where the oil is produced, the price is set for the whole world, not just a region. So, though the U.S. may import most of our heavy crude oil from Canada – and not the Middle East – we don’t really have as much control of the price,back-and-forth even though that oil doesn’t pass through the Strait of Hormuz.

To bring this back to the airlines: in Europe, it’s a supply problem. In the U.S., it’s a price problem.

How are U.S. airlines responding?

In January of 2026, U.S. airlines were paying on average about $2.36 per gallon for jet fuel. Today, those prices are hovering closer to $3.80 to $4.00 per gallon. That means jet fuel costs have jumped by roughly 60 to 90 percent in just a few weeks, depending on the market. For that same month, U.S. airlines burned through 1.44 billion gallons of jet fuel (about 46-50 million gallons a day).

Cost? About $3.4 billion for airlines just on fuel alone.

For North American carriers, effects from the conflict in the Middle East and the back-and-forth, uncertainty of shipping through the Strait of Hormuz are also being felt:

• Delta Air Lines is in a better position than most because it is the only airline in the world that owns an oil refinery. Delta bought the Trainer refinery in Pennsylvania back in 2012 (a move that seemed unusual at the time, but today, who doesn’t want their own fuel refinery and depot?).

Nonetheless, on April 14th, Delta raised first checked bag fees from $35 to $45. Second,reinstated checked bag fees are also up $10; a third checked bag on Delta will now cost an extra $50! Delta’s CEO also acknowledged the carrier had raised some fares.

United also joined the ranks of Delta (and JetBlue) in hiking its checked bag fees.

• Air Canada made a stunning announcement last week, cancelling all of its flights between JFK/Montreal and JFK/Toronto. The suspension starts June 1st – Air Canada says those services should be reinstated by October. Air Canada will continue flights to and from Montreal and Toronto through two other New York area airports, LaGuardia and Newark Liberty. The carrier also suspended its Salt Lake City/Toronto flights starting June 30th.    
• Like other U.S. carriers, Southwest Airlines raised its new checked bag fees by $10 in early April ($45 for the first bag and $55 for the second). Southwest ended its Bags Fly Free program in May of 2025. Notably, Southwest hasn’t dramatically raised ticket prices, despite the rise in jet fuel prices.

Decades ago, Southwest had a policy of buying its fuel ahead of time (known as fuel hedging) – for years, it was a successful way to maintain some control over volatile fuel prices. The strategy helped SWA weather previous rises in fuel costs, but in some quarters, hedging also hurt the company when the cost of aviation fuel plummeted, and the airline overpaid. Southwest dropped its fuel hedging policy last year, though it still has some hedging contracts in place through 2027.

With fuel costs rising this fast, airlines aren’t the only ones adjusting – travelers may need to as well.

Airline tickets: buy now or buy later?

Buy now. But pay more now.

Here’s the logic: airfare prices are constantly changing, and in a volatile market, waiting can mean paying more. But, if you buy now, be careful what you choose because not all tickets are created equal:

• Basic Economy, Saver, or Essential Economy tickets are usually non-changeable

• Basic Economy, Saver, or Essential Economy tickets are usually non-refundable

• Basic Economy, Saver, or Essential Economy tickets are usually not eligible for price drop credits

Instead, look for tickets that give you some flexibility if prices drop after you’ve already booked.

• Main Cabin Economy

• Premium Economy

• Business Class

• First Class

Those last two can get pricey – but the sweet spot for most travelers is main cabin or premium economy. On most major U.S. airlines, those tickets let you change or cancel your flight – often for a credit, and sometimes a refund.

And don’t forget that the Department of Transportation requires airlines to give you a full refund if you cancel within 24 hours of booking, as long as the ticket was purchased at least seven days before departure.

To wrap it all up – remember that it’s not just about when you buy – it’s about what you buy. Because in a global market like this, what happens halfway around the world doesn’t stay there: it shows up in the price of your next flight.