Rising Oil Prices Push Up Airline Fuel Costs as Carriers Rely on Hedging Strategies
By Sardar Burhan :
Surging oil prices triggered by the Iran conflict are increasing pressure on airlines worldwide, as jet fuel one of the industry’s largest expenses continues to rise sharply.
Benchmark Brent crude oil climbed close to $100 per barrel on Thursday amid concerns that the war could disrupt global energy supplies.
At the same time, spot jet fuel prices in Northwest Europe reached about $1,536 per metric tonne, hovering near the record intra-day level of $1,633 touched earlier this week.
Airlines turn to hedging
To manage volatile fuel costs, many airlines use financial instruments such as futures and options to hedge against price increases. Airlines also hedge currency risks because jet fuel is typically priced in United States dollar.
However, not all carriers use this strategy. Many United States airlines abandoned fuel hedging years ago, leaving them more exposed if high oil prices persist.
Below is an overview of how some of the world’s major airlines are managing fuel costs.
Europe and Asia carriers
The Franco-Dutch airline group Air France-KLM said earlier this year it increased its fuel hedging exposure to 87% of annual consumption, up from 68%, and extended its hedging horizon to eight quarters.
Hong Kong-based Cathay Pacific has hedged fuel costs into the second quarter of 2027, covering about 30% of its expected costs through mid-2026.
Meanwhile, China Eastern Airlines said it had not carried out any jet fuel hedging transactions in the first half of 2025 and had no outstanding hedging contracts by mid-year.
Low-cost carriers secure coverage
British budget airline easyJet has hedged 84% of its fuel requirements for the first half of 2026 and 62% for the second half, with partial hedging extending into 2027.
Similarly, Ryanair has secured about 77% of its fuel needs for its financial year ending March 2026 at an average price of around $761 per tonne.
Hungary’s Wizz Air said it had hedged 83% of its jet fuel needs for the year to March 2026, with additional coverage extending into 2027 and 2028.
Long-term hedging strategies
Several major carriers maintain longer hedging horizons.
The parent group of British Airways and Iberia, International Airlines Group, operates a rolling three-year hedging strategy to manage both fuel and currency exposure.
Germany’s Lufthansa has hedging coverage extending up to 24 months, with around 76% of its projected 2025 fuel needs already secured.
Meanwhile, Singapore Airlines hedges fuel for as long as five years, though the proportion of coverage declines further into the future.
Mixed strategies across the industry
Other airlines maintain partial hedging to balance risk and flexibility.
Qantas reported that about 81% of its fuel for the second half of its financial year ending June 2026 has been hedged.
Finnair recently extended its hedging horizon to 24 months as part of an updated risk management policy.
Meanwhile, SAS temporarily halted fuel hedging due to market uncertainty and currently has no fuel consumption hedged for the coming year.
War-driven volatility
Industry analysts warn that continued conflict in the Middle East could push fuel prices even higher, adding to financial pressure on airlines already grappling with longer flight routes, higher operating costs and geopolitical instability.
Fuel typically represents one of the largest operating costs for airlines, meaning prolonged high oil prices could significantly impact profitability across the global aviation sector.
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