Travellers in the United Arab Emirates (UAE) and other countries in the Gulf Cooperation Council (GCC) may have to pay up to 30% more for airfares due to increased fuel surcharges as a result of rising oil prices following the outbreak of a regional military conflict.

The conflict between the US, Israel, and Iran has caused a spike in oil prices, resulting in a significant global increase in jet fuel prices. This has had a negative impact on the profits of both regional and global airlines.

Jet fuel typically makes up about one-third of an airline’s total operating costs. As a result, many airlines in the region and Asia have either introduced or raised their fuel surcharges in the past week, leading to higher airfares just before the Eid Al Fitr holidays, which will be celebrated later this week in the UAE and Gulf region.

Despite the conflict, airports and airlines in the UAE and GCC have resumed limited operations to major destinations. However, Saj Ahmad, chief analyst at London-based StrategicAero Research, notes that airfares for GCC airlines, particularly from key markets like the UK, have already seen an increase since the conflict began.

Ahmad adds that with the uncertainty of when the conflict will end, airlines will continue to raise fares to compensate for the higher costs of oil and offset the loss of revenue from reduced flight operations.

Many Gulf and Asian carriers have announced, implemented, or increased surcharges to mitigate the impact of high oil prices. According to Ahmad, premium routes such as those from Dubai to London, New York, Mumbai, and Riyadh are expected to see the largest price increases. He estimates that economy class fares on these routes could climb anywhere from 10 to 20%.

James Noel-Beswick, head of commodities at Sparta, adds that the Singapore kerosene benchmark, which has doubled from approximately $91 to $190 per barrel, points to a minimum airfare increase of 30% and potentially even higher on routes with limited competition or reduced flight schedules.

He advises travellers on routes from the UAE and GCC to London, New York, Tokyo, Mumbai, and Riyadh to plan for significantly higher fares than they are used to. The March Singapore kerosene crack, an indicator of the difference between jet fuel and crude oil prices, has risen from $22 to $96 per barrel since the outbreak of the conflict.

Noel-Beswick emphasizes that this is not a temporary market fluctuation, but a structural dislocation. He notes that while crude oil prices have risen sharply, jet fuel prices have increased by a much larger margin. This indicates that the two markets are no longer moving in the same direction at the same pace.