Jet fuel at $180 a barrel means high airfares are here to stay

Jet fuel now costs around $180 a barrel, more than double the roughly $80 price a year ago, and the head of the Association of Asia Pacific Airlines says that gap will keep airfares elevated for the foreseeable future. Wong Hong, director-general of the association that groups 18 airlines in the region, delivered that verdict Friday after an AAPA conference. He was answering a direct question: are high airfares a lasting feature rather than a temporary adjustment?

"I believe so," Wong said. "We are living in completely different market conditions and a completely different cost environment … and it looks like these high prices will continue to prevail."

How much of an airline's costs does fuel represent?

Fuel accounts for a third of airline operating costs, according to Wong. That means every sustained increase in crude flows directly into the economics of each flight. It also means further fare increases threaten carriers' financial performance if passengers push back.

Wong said airlines are trying to contain ticket prices while protecting their finances, and avoiding increases that could drive passengers away. He acknowledged the bind plainly.

"Airlines will try their best to hold on to the fares that they can charge without trying to lose passengers, but it is a tricky dilemma," Wong said.

The dilemma has a structural cause, not just a market one. Passengers often book flights months in advance, locking in fares before airlines purchase the fuel needed to operate those flights. That mismatch between ticket sales and fuel purchases complicates carriers' ability to manage rising costs, Wong said.

Takeaway: airlines are squeezed from both ends — fares set months ago, fuel bought at today's prices.

Why can't airlines just raise fares again?

There is no clear answer, according to Wong, because passenger price sensitivity varies across markets. A fare increase that passengers in one region absorb may drive away flyers elsewhere.

The industry has already moved once. Major airlines across the Asia-Pacific, Europe and North America have raised base fares, hiked fuel surcharges or added extra fees since the Iran war began in late February.

The demand data explains the caution. AAPA figures show passenger traffic across Asia-Pacific slumped for five consecutive months from April to August, before rebounding marginally in September. For the first nine months of this year, overall passenger traffic in the region still grew by 1.9% — a positive number, but a thin one set against five straight monthly declines.

Wong said carriers are doing their best to find the right price levels in different markets, striking a balance between absorbing higher costs and pricing passengers out. He offered no formula for where that balance sits.

Takeaway: airlines know demand is fragile; the September rebound does not erase five months of decline.

What else is pushing costs up?

Fuel is the headline, but not the whole bill. Wong said airlines continue to face supply-side challenges, including aircraft delivery delays and the high cost of maintaining older planes — a direct consequence of newer aircraft arriving late.

He also credited the industry with resilience and said travel demand remained strong. That claim deserves scrutiny: demand grew 1.9% across the region this year, but it shrank for five consecutive months before a marginal September rebound. "Strong" is Wong's word; the monthly data shows strain.

What Wong did not say is equally notable. He gave no timeline for relief, no projection of when fuel prices might ease, and no indication that any airline plans to absorb costs indefinitely.

What does this mean for travelers?

The message from the region's main airline lobby is that the fare reset is structural, not cyclical. With fuel at roughly $180 a barrel versus $80 a year earlier, and with fuel making up a third of operating costs, the arithmetic leaves carriers little room. Passengers who booked at old fares are flying on fuel airlines bought at new ones.

Until fuel retreats or delivery backlogs clear, travelers across Asia-Pacific, Europe and North America should expect the fares, surcharges and extra fees introduced since late February to remain in place — because the industry's own director-general says they will.