Asian Airlines Weigh Fuel Hedges as Jet Fuel Hits $148 a Barrel

Fuel now accounts for 33% of airline operating costs, compared with 25% before the war, according to Wong Hong, director general of the Association of Asia Pacific Airlines. Airlines facing the end of their current hedge contracts confront a “very, very tricky dilemma,” he told Reuters.

Air Astana chief executive said the industry may be entering “a new normal” in which fuel prices remain near current levels. That outlook could favor hedging against further rises, though some carriers are reluctant to commit at prices they consider high.

Japan Airlines sees the market differently. “We still think it will be cyclical. It's going to go up and down,” senior managing executive officer Ross Leggett told Reuters. The airline is budgeting for a worst-case price of $160 a barrel, the level it paid for fuel from April to September.

Airlines worldwide are contending with the war’s effect on fuel costs. Lower profitability and plans to raise ticket prices are among the immediate consequences.