Airlines cut fuel hedges as war raises jet fuel prices and warns of higher fares

Jet fuel prices have doubled since the start of the Iran war, leading airlines to abandon fuel hedges and prepare for steep fare increases.

By SafarSamachar Desk29 Oct 2026, 7:20 am IST

Illustration

Illustration: SafarSamachar Pix Desk, created with AI assistance. Not a photograph of the event.

Key facts at a glance

1Jet fuel prices are roughly double their levels before the Iran war.
2AirAsia CEO Tony Fernandes says most hedging is finishing.
3Finnair has an average hedging ratio of 34% for 2027.
4Ryanair says none of the European airlines are well-hedged through 2027.
5US airlines have largely abandoned fuel hedging.

Jet fuel prices have more than doubled since the start of the Iran war, pushing airlines to abandon fuel hedges and prepare for steep fare increases. Airlines that lock in fuel prices now could be stuck with expensive fuel if geopolitical tensions ease and prices drop.

This has left carriers exposed to rising costs, forcing them to raise fares to offset higher expenses.

AirAsia CEO Tony Fernandes said his airline is budgeting for 12 months of high oil prices and has stopped trying to predict future geopolitical developments. Finnair has also stopped adding new fuel hedges, with its average hedging ratio for 2027 at 34%.

Ryanair’s CEO warned that European airlines are not well-hedged through 2027, predicting air fares could rise by 15% to 20% as a result.

US airlines, by contrast, have largely avoided hedging, relying instead on consumer willingness to pay higher prices.

What this means for travellers

Travellers should expect higher air fares in 2027 as airlines face rising fuel costs and reduced hedging protection. Budget airlines may be particularly affected, so planning ahead and booking early could help manage costs.

Sources

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