Air New Zealand Raises Fares as Middle East Conflict Drives Jet Fuel Prices Higher

Air New Zealand has announced fare increases across its network following a dramatic surge in jet fuel costs triggered by the U.S.-Israeli war on Iran. The New Zealand flag carrier confirmed economy fares have risen by NZ$10 on domestic routes, NZ$20 on short-haul international flights, and NZ$90 on long-haul services, making it one of the first airlines globally to implement broad ticket price hikes since the conflict began.

Jet fuel prices, which hovered between $85 and $90 per barrel before hostilities broke out, skyrocketed to between $150 and $200 per barrel within days. The airline has suspended its 2026 financial outlook, citing uncertainty surrounding the ongoing conflict. Should elevated fuel costs persist, Air New Zealand warned further pricing action and potential schedule adjustments may follow.

The ripple effects are being felt across the global aviation industry. Vietnam Airlines has urged local authorities to waive environmental fuel taxes as Vietnamese carriers face operating cost increases of 60% to 70%. Meanwhile, airspace closures are forcing pilots to reroute around the Middle East, squeezing capacity on key Asia-Europe corridors and driving ticket prices sharply higher on those routes.

Some relief emerged after U.S. President Donald Trump signaled the war could end soon, pushing oil prices back down to around $90 per barrel from a Monday peak of $119. Airline stocks partially recovered in response, with Air New Zealand gaining 2%, Korean Air Lines rising 6%, and Qantas and Japan Airlines each posting modest gains after steep prior-day losses.

With fuel typically representing 20% to 25% of airline operating costs, sustained high oil prices pose serious risks ahead of peak summer travel season. Tourism-dependent economies are already counting the cost, with Thailand projecting losses of nearly $1.3 billion in revenue if the conflict extends beyond eight weeks.