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Airfares set to rise up to 10% due to higher jet fuel, Middle East airspace closures
Gulf carriers such as Emirates, Qatar Airways and Etihad Airways can absorb additional costs as they hold sizeable cash reserves, according to Oxford Economics
- PUBLISHED: Sun 19 Apr 2026, 8:13 AM
[Editor's Note: Follow Khaleej Times live blog for the latest regional developments with the US-Israel-Iran ceasefire now in effect.]
Airfares around the world could rise by as much as 10 per cent because of higher jet fuel prices and airspace closures. Long-haul flights are likely to see the biggest increases. However, Gulf carriers can absorb rising fuel costs as they hold sizeable cash reserves, according to a new study.
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“Airlines are already raising ticket prices or adding fuel surcharges to cover higher costs from the Iran war. However, with demand weakening because of the broader economic impact of this oil shock, airlines know that travellers are sensitive to price increases, which should help limit major hikes. Higher oil and jet fuel prices from a two-month conflict mean base airfares could go up by 5 to 10 per cent,” said Oxford Economics in its latest report, Iran War’s Impact on Fuel Prices and Air Passenger Demand.
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The report also said that airspace closures in the Middle East will increase costs because airlines have to reroute flights, which uses more fuel per trip.
Since the Middle East war started on February 28, jet fuel prices have almost doubled. Ongoing supply disruptions are likely to make prices rise even more.
Jet fuel usually makes up 25 to 35 per cent of an airline’s operating costs. For some low-cost airlines, fuel can be as much as 60 per cent of their costs, which makes the industry very sensitive to changes in oil prices.
Emirates airline’s 2024-25 results show that its operating costs, including fuel, rose by 4 per cent as operations increased. Fuel is still the biggest part of the airline’s costs at 30 per cent.
In 2025, fuel made up 25 per cent of flydubai’s total operating expenses.
The study predicts that air passenger demand in the Middle East will drop by almost 41 per cent in 2026 because of the military conflict involving the US, Israel, and Iran.
Sizeable cash reserves
In the Gulf, leading airlines like Qatar Airways, Emirates, and Etihad Airways “are currently in a strong financial position, with sizeable cash reserves giving them a greater buffer to absorb rising costs in the short run,” said Oxford Economics.
According to Emirates Group’s results, the first half of 2025-26 ended with a record cash position of Dh56 billion ($15.2 billion) as of September 30, 2025. This shows that UAE and regional airlines are well prepared to handle geopolitical challenges.
However, Oxford Economics warned that Gulf airlines are at risk because they rely heavily on long-haul and transit flights.
“Long-haul travel will be hit hardest by these increases because fuel is a much bigger part of the ticket price. Higher prices may also lead price-sensitive travelers to delay or cancel longer trips,” it said.
In the US, airlines have stopped fuel hedging in recent years. As a result, they will likely pass some of the higher fuel costs on to customers through higher airfares.
Oxford Economics expects that most, if not all, regional flights will be able to resume in the second half of 2026.
