Vietnam Airlines has begun reducing flight capacity as jet fuel prices surge following the escalation of the conflict between the US, Israel, and Iran, according to industry analysts.
The price of Jet A1 fuel has nearly tripled since late February, briefly approaching $200 a barrel in early March, disrupting airline cost projections and turning previously profitable routes into losses. The conflict, which began with US and Israeli military campaigns against Iran, has triggered an oil shock reminiscent of the 1970s, impacting air travel across Asia.
The crisis extends beyond fuel costs. Airspace closures and security restrictions across Gulf states – Qatar, the United Arab Emirates, and Bahrain – have forced the rerouting or grounding of thousands of flights. This has lengthened flight times, strained crew schedules, and further increased fuel consumption at a time of already inflated prices. Emirates, Etihad, and Qatar Airways, the region’s major hubs, have seen significant operational disruptions, with Emirates restarting operations at 60% capacity as of March 15th.
The impact is particularly acute for Asian carriers reliant on Gulf hubs for connectivity. Airlines like Vietnam Airlines, AirAsia, Lion Air, and Garuda Indonesia are responding by cutting capacity and increasing fares. Analysts warn that prolonged conflict could lead to deeper schedule cuts, aircraft groundings, and accelerated fleet retirements, despite strong post-pandemic travel demand.
The disruption is also affecting tourism. Ravi Gosain, President of the Indian Association of Tour Operators (IATO), stated that tour operators are shifting focus away from the Middle East, directing travelers towards destinations in the Far East, and Pacific. Bookings to the UAE and other parts of the region have slowed as flight uncertainty increases.
The crisis highlights the global aviation industry’s dependence on the Gulf corridor. Before the conflict, approximately 300,000 passengers passed through Dubai, Abu Dhabi, and Doha daily, with two-thirds connecting to onward flights. The closure of airspace in Russia and Ukraine following the 2022 invasion had already increased traffic through these hubs, making the current disruption particularly significant.
Southeast Asian tourism is also feeling the effects, with European and GCC travelers facing altered travel routes. The situation is creating a ripple effect across airlines, hotels, and tour operators, as the industry navigates the challenges of rerouted flights and uncertain bookings.
As of March 20th, no resolution to the Gulf conflict has been announced, and the long-term impact on global aviation and tourism remains uncertain. Emirates plans to operate 22 daily flights to India and return to 11 daily flights to five British airports by Saturday, but the broader implications for air travel routes and costs are still unfolding.
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