Global Jet-Fuel Shortage Forces Airlines to Cancel Flights, Raise Fares

More than one in 20 scheduled flights were cancelled on a single Monday as a global jet-fuel crisis pushed U.S. prices from $2.17 to $4.57 per gallon in a matter of weeks, according to aviation analytics firm Cirium and the Argus U.S. Jet Fuel Index. The cancellation rate was nearly double that of the same period last year.

The cause traces to the closure of the Strait of Hormuz, the narrow waterway through which roughly one-fifth of the world's oil passes. Since the war began on Feb. 28, jet fuel costs surged across both U.S. and European markets. By March 27, the Argus U.S. Jet Fuel Index stood at $4.57 per gallon, up from $2.17 before the conflict; European prices hit approximately $1,713.50 per ton, compared with $742 per metric tonne a year ago. Brent crude reached as high as $116 a barrel. Because more crude is required to refine jet fuel than petrol or diesel, a squeeze on crude supply delivers an outsized blow to aviation, where fuel typically makes up about a quarter of operating costs.

United Airlines CEO Scott Kirby laid out the financial stakes plainly. "If oil prices stayed where they are today, that's $11bn of expense for us, and that would require prices to be up 20pc to break even, to cover that cost," he told Bloomberg. Airfares had already risen 15-20% in the preceding weeks, Kirby said, and he warned higher prices would cut into demand: "There will be less demand [and] fewer people travelling as prices go up." He projected that in a worst-case scenario, oil could rise to $175 per barrel and trade above $100 through 2027. United said it would cut approximately 5% of planned flights in the near term, scale back off-peak service, and suspend select international routes including those to Israel and Dubai.

Delta Air Lines CEO Ed Bastian said the fuel spike added as much as $400 million in costs in March alone. American Airlines expected fuel to add about $400 million to its first-quarter expenses. Speaking at the J.P. Morgan Industrials Conference, Bastian said demand had held firm across every segment of the business: "We're seeing strength in every market that we look at." All three major U.S. carriers reported record bookings and said they did not expect a significant dent in quarterly profits, with strong ticket sales absorbing much of the incremental cost for now.

The more alarming concern is physical availability. Airlines warned that jet fuel inventories could run dry within weeks, a scenario far more severe than fare increases alone. The UK was set to receive its last-known shipment of jet fuel from the Middle East, raising urgent questions about whether alternative supply lines could be secured before European summer travel began.

Asia has so far borne the worst of the shortage. Europe faces mounting risk heading into peak summer season, given the EU's heavy reliance on Middle Eastern fuel imports. Executives from Lufthansa and Air France-KLM warned that a prolonged conflict would push fares higher and strain already tight supplies.

Thousands of flights have been cancelled globally, fares have climbed sharply, and United is already cutting routes. Whether carriers can continue absorbing billion-dollar fuel bills on record booking revenue depends entirely on how long the Strait of Hormuz remains closed.