Global Jet Fuel Shortage Forces Airlines to Slash Routes and Hike Fares
The Strait of Hormuz, one of the world’s most critical oil shipping corridors, has been effectively closed since early March following the outbreak of the U.S. And Israeli conflict with Iran. The result is a jet fuel supply shock rippling across the global aviation industry, forcing carriers from Europe to North America to cancel thousands of flights, introduce new surcharges, and in some cases, issue profit warnings that have sent investors fleeing.
For travel merchants and tour operators, the implications are immediate and serious. Supply constraints are pushing up ticket prices, reducing available capacity on key routes, and forcing rebooking decisions that complicate summer travel planning for millions of passengers.
Europe Acts to Protect Summer Travel
The United Kingdom moved fastest. On May 3, 2026, the British government enacted emergency legislation allowing airlines to cancel or consolidate flights without risking their airport slot rights for the following season. The change addresses a longstanding structural problem: airlines have historically operated near-empty flights solely to retain takeoff and landing slots, a practice now recognized as untenable given fuel constraints.
“Relaxing the rules around slots at airports will allow airlines more flexibility and so we expect them to give passengers as much notice as possible of cancellations during this period,” said Rob Bishton, chief executive of the UK Civil Aviation Authority.
The legislation was developed in coordination with Heathrow and Gatwick airports, British Airways, Virgin Atlantic, and easyJet. It follows a direct appeal from the transport secretary to industry stakeholders, acknowledging that the strait’s closure has left Europe with only weeks of jet fuel reserves in some estimates.
The European Commission launched a parallel initiative called AccelerateEU, which includes optimizing jet fuel distribution across EU member states to prevent localized shortages from cascading into systemwide disruption.
Lufthansa Group Cancels 20,000 Flights
The scale of cuts varies by carrier, but no airline has been spared. Lufthansa Group has been among the hardest hit, cancelling approximately 20,000 flights across its network to protect its airlines from unsustainable fuel costs. The carrier’s short-haul CityLine subsidiary is grounding 27 aircraft.
KLM, part of the Air France-KLM group, cancelled more than 150 European flights operating out of Amsterdam Schiphol Airport over the next month. The Dutch carrier said the flights were “no longer financially viable to operate” given prevailing kerosene prices.
Air France-KLM responded by raising long-haul cabin fares by 50 euros ($58) per round trip to offset surging fuel expenses. United States carriers have taken a similar approach. United Airlines CEO warned that fares may need to rise by as much as 20 percent. Delta Air Lines cut planned capacity by 3.5 percentage points and increased checked baggage fees by $10 for the first and second bag and $50 for the third.
Fees and Surcharges Proliferate Across Carriers
The fuel-driven cost spike has triggered a broad-based push toward ancillary fee increases across virtually every carrier reporting on the situation.
Alaska Air raised checked bag fees by $5 for the first bag, $10 for the second, and from $50 to $200 for a third bag on North American and Hawaiian Airlines routes. American Airlines implemented comparable increases, adding $10 to first and second checked bags and $150 for the third on domestic and short-haul international flights. Air India switched from a flat domestic fuel surcharge to a distance-based grid, saying existing international surcharges failed to cover exponential fuel cost increases.
Budget carriers have faced the most acute pressure. Spirit Airlines is reportedly on the verge of collapse after failing to secure a $500 million rescue package from the Trump administration. Negotiations stalled when Spirit’s bondholders and other government stakeholders withheld support, according to sources familiar with the matter cited by the Wall Street Journal.
Asia and Canada Also Affected
The disruption is far from limited to Europe and the United States. AirAsia X cut 10 percent of flights across its group and added a fuel surcharge of roughly 20 percent. Cathay Pacific is cancelling about 2 percent of its scheduled passenger flights from mid-May through the end of June, while its budget subsidiary HK Express is cutting approximately 6 percent. Air Canada is reducing four of its 38 daily flights to New York JFK from June 1 through October 25, 2026.
Air New Zealand was among the first carriers to announce broad fare increases when the conflict broke out and has since slashed flights through May and June while suspending its full-year earnings forecast. The Canadian airline Air Transat is cutting planned capacity by 6 percent from May through October, with particular impact on routes to Europe and the Caribbean.
What Merchants Need to Know
The Strait of Hormuz carries approximately 20 percent of the world’s oil exports, and the closure’s direct effect on jet fuel markets has been swift and severe. The UK alone imports roughly 65 percent of its jet fuel, much of it sourced from the Middle East. With inventories tightening across Europe, the situation is not expected to resolve quickly.
For travel merchants and tour operators, several practical steps can reduce exposure. Reviewing existing bookings on affected carriers and proactively contacting passengers about potential changes will reduce last-minute disruption. Building flexible modification and cancellation policies into contracts for summer travel will provide a buffer as capacity continues to shift. Monitoring fuel surcharge announcements from individual carriers on a weekly basis is advisable given the rate of change.
The European Commission’s distribution optimization measures and the UK government’s slot flexibility rules should help prevent the worst-case scenario of mass last-minute cancellations. However, travellers and operators alike should plan for higher costs and reduced availability across international routes through the summer season at minimum.
