Soaring jet fuel prices force airlines to slash flights and raise fares
A sharp rise in jet fuel prices is pushing airfares higher and forcing airlines to cut flights. The surge follows tensions in the Middle East, where a blockade in the Strait of Hormuz has disrupted oil supplies. Meanwhile, Portugal's government is adjusting its plans for state-owned airline TAP amid the turmoil.
Fuel costs for airlines have doubled since late February 2026. The Iran conflict and the Strait of Hormuz blockade have driven kerosene prices up, squeezing carriers worldwide. Airlines like United have responded by reducing flights by 5%, while others, including Air India, have added surcharges of up to 33%. Unlike the COVID-19 pandemic—when grounded planes cut costs—this crisis is inflating expenses without a matching drop in demand.
Fuel now accounts for 20-40% of airlines' operating costs. The situation is worse than past disruptions, according to Portugal's Finance Minister, Joaquim Miranda Sarmento. Rising prices are also feeding into broader inflation, adding pressure on households and businesses. Portugal's government had planned to sell up to 49.9% of TAP Air Portugal. But the aviation downturn has complicated those efforts. IAG, the owner of British Airways and Iberia, reportedly withdrew interest in acquiring the airline. Meanwhile, hundreds of US troops are deploying to the Middle East, raising fears of further escalation in the region.
Airlines face a prolonged period of higher costs as fuel prices remain elevated. Portugal's budget surplus gives it some flexibility, but the aviation sector's struggles will likely persist. The Middle East tensions show no signs of easing, keeping pressure on global oil markets.
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