00:00Now global airfares are climbing sharply as the ongoing Iran conflict drives up jet fuel costs and disrupts key airspace.
00:08Our correspondent Fei Kuan joins me now with more.
00:11Fei, how severe are these airfare hikes?
00:15Right, Muriel, just to show a bit of a snapshot of airfares right now,
00:20even as many airlines are still operating, prices are really surging.
00:25So we've taken quite a few popular daily common routes between Asia and Europe.
00:30And yes, you can see prices have nearly tripled if we were to compare it before the conflict.
00:36So that's February 28th before that and with current fares now in early April.
00:40And the last time we saw surges like this was the post-COVID period from around 2022 onwards when travel
00:47restrictions were lifted and demand surged.
00:49But this time around, the driver here is disruption.
00:52We've seen now that the Iran conflict is hitting oil markets, but it's also shaking up aviation corridors.
00:58Now the conflict may be isolated in the Middle East, but it's really this region that's a critical global transit
01:04hub.
01:04Cities like Dubai, Doha and Abu Dhabi connect both Europe, Asia and Africa.
01:10And airlines like Emirates, Qatar and Etihad really rely on these routes to move millions of passengers.
01:16So to show you a bit of that scale, international airports at these three mega hubs alone that I've just
01:21mentioned handled about 180 million passengers in 2025.
01:26More than half of those were transit passengers and 40 million of these transit passengers were using the region to
01:33travel between Europe and Asia.
01:35Now the Middle East typically accounts for about 4 to 5 percent of global air traffic.
01:41And now it's really parts of this airspace that are restricted or they're a bit too risky to fly through.
01:47So airlines are being forced to take longer routes, often diverting south into the Indian Ocean to connect Europe with
01:53Southeast Asia and beyond.
01:55So that means more fuel, longer flight times and fewer flights overall.
02:00Airlines are really facing this double whammy now, right?
02:03So higher fuel costs, more expensive routes.
02:05And with jet fuel making up as much as 30 percent of costs, airlines are facing this double hit.
02:12So I spoke to aviation expert Shukor Yusof for how they've been coping.
02:16Let's hear more from him.
02:19The critical point we're looking at now is jet fuel prices,
02:23which have multiplied more than twice compared to pre-February 28 when the conflict started.
02:31So airlines with very deep pockets, like Singapore Airlines, like Cathay, like Qantas,
02:39are able to better maneuver around the shortages because they are able...
02:47One, I think they have had foresight to begin with.
02:50So I give you the example of Singapore Airlines.
02:54They have always had this understanding that they need to hedge.
03:01Whatever amount it takes to suit their fleet, to suit their network.
03:06I think Cathay Pacific is the other one that I need to highlight also,
03:10which has a very good way of being flexible when it comes to jet fuel hedging.
03:17So they understand that they don't produce fuel, they don't produce oil in Hong Kong.
03:25And so they're dependent on what's happening out there.
03:28For certain, I think the price of oil will continue to be unpredictable and likely to go up, go higher.
03:36And that in turn means higher jet fuel prices.
03:40So if you're an airline and you're on a hedge, then you're in trouble.
03:45So some airlines in our region have had to make very tough decisions.
03:51In Korea, the Korean Air has decided to cut down on cost across the entire company.
04:01So many airlines have taken the decision, very difficult decision,
04:07to put its staff on unpaid leave, for example,
04:13and also to cut on unnecessary wastage across the operations.
04:20So this is not going to end anytime soon.
04:23I think the longer the war drags on,
04:28I think airlines will be very much forced to take very tough decisions
04:35in terms of what to do with the destinations of the network that they fly to
04:40and how to take care of their employees.
04:47Right, Fei, only what we understand is only more to lose if this conflict continues to drag on.
04:52We're seeing that from the US that it could last a few more weeks at least.
04:56So Fei, what does this mean for travellers right now?
04:59What are we seeing in terms of bookings or flight cancellations?
05:04Well, for travellers, the uncertainty really is starting to show.
05:09So if we look over here, back in February, global air travel was actually booming.
05:14The International Air Transport Association, in fact, reported that demand was up 6.1% year on year.
05:20Planes were also fuller than ever, with load factors hitting a record 81.4% for the month of February.
05:27But that momentum, of course, is now under threat with unpredictable conflicts such as this.
05:32Some travellers are holding back, especially those that rely on transit through the Middle East.
05:37Tens of thousands of flights and possibly more are going to be cancelled.
05:41And overall capacity in the region has dropped by 59% to just 41% of normal levels.
05:47It was previously operating at 100% in February.
05:51So what does this mean for consumers and the audience's travel plans, especially for long-haul flights?
05:57Because even if the conflict eases, Shukor warns that it could take time for prices to stabilise
06:03and for airlines to fully recover.
06:05Let's hear more from him.
06:06For one, the airfare has gone up and it's going to go higher because there's only a certain level that
06:15the airlines can be able to confront
06:21without adding fuel surcharges or adding any more surcharges.
06:27So I think consumers need to understand that airlines have to earn a living as well.
06:35And they've always been blamed, I think, unfortunate, that they're taking advantage of the situation globally
06:45as what we are seeing in the world right now.
06:49But that's not really true.
06:51So the other thing I would also say is that airfares is part of supply and demand.
06:58And so what we're seeing right now, I mean, there's a lot of criticism about how expensive airfares are
07:05between, say, from KL to London Heathrow, for example, right?
07:11So that's only because there's huge demand for that in spite of what's happening in the Middle East.
07:18And so the airline people have very little ability to offset that, especially at this current jet fuel prices.
07:29Even at this relatively high airfares, it's very difficult for an airline to make money.
07:36You can charge maybe 25,000 ringgit for a business class seat on MAS.
07:40But I can safely tell you that it's very difficult for them to make a profit based on how much
07:48jet fuel is today.
07:51Similarly for other airlines.
07:53So that's the difficulty the airlines face, even at certain price levels, that the average consumer thing is exorbitant.
08:02But the airline still has trouble to make money.
08:06So when airlines don't make money, then it's also a problem for the rest of us, the rest of society,
08:13because airlines are crucial to the way we live today.
08:17Air connectivity is exceptionally fundamental to how we do our work, to how we live our lives.
08:27So at the end of the day, Amirul air travel is still a complex balance of supply, demand and cost.
08:33And even as airlines struggle with these sky-high fuel prices,
08:37travellers are also feeling the impact through higher airfares and uncertainty around flights.
08:42But it's worth understanding the other side of the coin and being mindful of the challenges that airlines are facing.
08:49Right. Thank you, Faye, for the report.
08:51That's all we have for now.
08:52We'll take a quick break and we'll be right back with more.
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