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The global aviation industry, and the air cargo sector in particular, is navigating one of its most severe fuel crises in recent memory. Triggered by the Middle East conflict and the near-closure of the Strait of Hormuz since late February, jet fuel prices have more than doubled in a matter of weeks, reshaping airline economics, forcing mass flight cancellations, and sending air freight rates to levels not seen since the height of the COVID-19 pandemic.
Jet Fuel Prices Have Doubled and Supply Is Running Short
The numbers are stark. According to IATA, global jet fuel prices surged 106.6% year-on-year in March 2026, while crude oil rose 43.1% and refining margins exploded by 320%. Prices jumped from roughly $99 per barrel at the end of February to as high as $209 per barrel in early April, according to multiple industry sources. In some European markets, prices have increased by over 100%, while forward markets suggest elevated levels will persist through the rest of 2026.
The root cause is the disruption to the Strait of Hormuz, through which an estimated 20% of global oil and liquefied natural gas previously flowed. The closure has removed about 360,000 barrels of daily jet fuel shipments, representing approximately 20% of globally shipped flows. Europe, which depends on Middle Eastern imports for roughly 20 to 25% of its jet fuel supply, has been particularly hard hit. The head of the International Energy Agency (IEA) warned in mid-April that Europe may have only six weeks of jet fuel reserves remaining before airports begin facing physical shortages. IATA Director General Willie Walsh called the assessment “sobering,” adding that cancellations due to fuel shortages could begin in Europe by the end of May. This scenario is already playing out in parts of Asia, where airports in Singapore, Bangkok, and several Indian cities have reportedly begun restricting additional flights to protect fuel supplies.
Two panel chart showing jet fuel price surge from $99 to $209 per barrel, and year-on-year trade lane growth rates in March 2026.
Jet fuel price per barrel, late February to early April 2026
Key air cargo trade lane performance, March 2026 YoY change
Sources: IATA, IATA/Platts, Associated Press, April 2026
The European Union responded with its AccelerateEU emergency plan, which includes a fuel observatory, coordination across member states, and efforts to relax anti-tankering rules that require airlines to uplift 90% of fuel at EU airports. The United States has emerged as a critical alternative supplier, with U.S. jet fuel exports soaring to a record 442,000 barrels per day in early April. That figure is roughly 200,000 barrels above the five-year average, as European buyers compete with Asian importers for every available cargo.
Airlines Respond with Flight Cuts, Surcharges, and Hedging
Airlines across the globe are scrambling to manage the impact. Lufthansa Group has announced the cancellation of 20,000 short-haul flights through October, a move projected to save over 40,000 metric tonnes of jet fuel. The group has also grounded 27 aircraft from its CityLine subsidiary and temporarily pulled its four Lufthansa Cargo A321 freighters from service. Lufthansa says it has hedged roughly 80% of its 2026 fuel requirements at pre-crisis prices, putting it in a stronger position than many competitors. Nevertheless, the group is still evaluating up to a 5% capacity cut across its 800-aircraft fleet.
KLM has cancelled 160 flights in May, citing routes that are no longer financially viable under current fuel costs. Delta Air Lines announced a 3.5% capacity reduction between April and June, citing an expected $2 billion in additional fuel costs. SAS has axed at least 1,000 flights in April, while Aer Lingus has cut around 500 flights from its summer schedule. Turkish Airlines suspended 23 international routes as of April 28. Air France-KLM expects its total fuel bill for 2026 to reach approximately €8 billion, which is more than €2 billion above last year. The biggest cost pressures are expected to arrive in Q2 despite the company having hedged roughly two-thirds of its fuel consumption.
Fuel surcharges have proliferated. Emirates is adding up to $322 per leg in economy and over $1,000 in premium cabins on routes to the Americas. Cathay Pacific doubled its long-haul fuel levy to approximately $200. British Airways introduced surcharges of around €150 on Asia-Pacific flights. EVA Air, ANA, IndiGo, and Asiana Airlines have all announced their own adjustments. No major U.S. carrier has added a formal fuel surcharge, though most have raised checked-baggage fees instead.
The Air Cargo Sector: Rising Rates, Shrinking Capacity, Growing Uncertainty
The impact on air cargo has been especially pronounced. IATA data released on April 29, 2026 shows that global air cargo demand fell 4.8% year-on-year in March, driven almost entirely by the Middle East crisis. Middle Eastern carriers experienced a 54.3% plunge in demand, while capacity from the region dropped 52.4%. Critical trade lanes such as Europe to Middle East and Middle East to Asia collapsed by approximately 58% each. Key hubs including Dubai, Doha, and Abu Dhabi saw severe operational disruptions, with Doha’s outbound cargo tonnage capacity falling 77% year-on-year in a single week in late March.
Outside the Middle East, the picture is more mixed but still under stress. Asia-Pacific carriers saw demand grow 5.4%, and African carriers led all regions with 7% growth as cargo rerouted through alternative corridors. The Europe to Asia trade lane grew 14.2% as carriers deployed additional direct flights to compensate for lost Gulf capacity. But these gains come against a backdrop of rapidly rising costs.
Global air cargo spot rates reached $3.73 per kilogram in mid-April, representing a 46% year-on-year increase and more than 40% above pre-conflict levels. On key routes, the picture is more extreme. Hong Kong to Europe rates hit approximately $5.45/kg, up nearly 17% year-on-year. Singapore to London fuel surcharges spiked roughly 290% month on month. Across all monitored routes, around half have seen monthly price increases of 20% or more. Fuel surcharges on cargo shipments, which typically account for 20 to 40% of total air freight costs, have approximately doubled year-on-year.
The disruption extends beyond pricing. Capacity from the Middle East and South Asia region remains approximately 30% below pre-conflict levels despite a fragile ceasefire in place since April 8. Carriers have shifted some operations to alternative locations such as Muscat and Jeddah, and several airlines, including Qatar Cargo, have gradually resumed freighter operations on select routes. But the recovery is slow and uneven.
Major integrators are also feeling the pressure. UPS implemented a Surge Emergency Fee effective April 19, adding $0.23 per pound on most international shipments and $0.32 per pound on shipments from China and Hong Kong to the U.S. Both UPS and FedEx now adjust their fuel surcharges weekly, and DHL has confirmed that jet fuel availability remains a global concern affecting operations and rates. DHL CEO Tobias Meyer has stated the company can secure jet fuel for its European operations through June, but expressed uncertainty about supply across Asia.
The crisis has also disrupted ocean freight, creating spillover effects for air cargo. Emergency fuel surcharges have now spread from ocean shipping into inland and intermodal transport across the U.S., Canada, Europe, and Latin America, with carriers like Maersk, CMA CGM, and ONE layering additional charges on trucking, drayage, and rail legs.
Labour Disruptions Add Further Strain
The fuel crisis has been compounded by industrial action. Lufthansa Cargo experienced pilot strikes in mid-April over pension provisions, with the Vereinigung Cockpit union walking out on four separate days. The strikes affected Lufthansa’s mainline, cargo, and CityLine operations, with more than 700 flights cancelled on some strike days.
Outlook: A Structural Shift, Not a Short-Term Shock
Industry analysts and executives increasingly describe the current situation as a structural constraint rather than a temporary disruption. Fuel typically accounts for around 30% of airline operating costs; for some carriers, this has now surged to nearly 45%. Hedging strategies, while helpful, cover only a portion of fuel needs and do not protect against physical supply shortages. Airlines that buy a significant share of fuel at spot market rates, typically between 20 and 30%, are particularly exposed.
The contract tender season for air cargo is adding another layer of complexity. Shippers have increasingly shifted toward shorter, three-month agreements instead of long-term contracts, and spot market activity has risen to approximately 52% of global volumes, approaching pandemic-era levels. Xeneta, the freight rate benchmarking platform, has advised delaying tenders until conditions stabilize.
Looking ahead, much depends on whether the Strait of Hormuz reopens in a stable and sustained manner. Iran briefly reopened the strait for commercial shipping under ceasefire terms in mid-April, but the U.S. naval blockade of Iranian ports remains in effect, and the ceasefire’s expiry date has passed without a permanent resolution. Forward markets indicate that jet fuel prices will remain elevated for the foreseeable future, and the EU’s energy commissioner has warned that the crisis could affect prices for months “or maybe even years.”
For the air cargo industry specifically, IATA’s Willie Walsh noted that underlying demand trends remain strong. Global goods trade grew 8% year-on-year in February, and manufacturing PMIs remain in expansion territory. But the industry’s ability to convert that demand into profitable operations will depend on fuel supply, pricing, and the geopolitical trajectory in the weeks and months ahead.
