AIRLINE SHARES STABILISE AFTER SELLOFF
In a move that lifted some airline stocks, US President Donald Trump said on Monday the war could be over soon, sending oil prices down to around US$90 a barrel on Tuesday from a high of US$119 on Monday.
In Asia, airline shares showed signs of stabilising, with Air New Zealand up 2 per cent, Korean Air Lines rising 8 per cent, Australia’s Qantas Airways gaining 1.5 per cent and Hong Kong carrier Cathay Pacific up more than 4 per cent. All had recorded sharp drops on Monday.
Cathay Pacific already has fuel surcharges in place, such as US$72.90 each way on flights between Hong Kong and Europe and North America, which it kept flat last month.
The airline said on Tuesday it reviewed the surcharges on a monthly basis, primarily taking into account movements in jet fuel rather than oil prices, and made adjustments where appropriate.
Fuel is the second-largest expense for air carriers after labour, typically accounting for a fifth to a quarter of operating expenses.
Some major Asian and European airlines have oil hedging in place, but US airlines largely stopped the practice over the last two decades.
High oil prices and airspace closures due to the war are pushing airline tickets on some routes sky-high and forcing people to reconsider travel plans.
CONFLICT TAKES TOLL ON TRAVEL INDUSTRY
High fuel prices could have severe implications for the global travel industry, with airlines already navigating tight airspace as pilots reroute to avoid the Middle East conflict and capacity on popular routes fills up.
Combined, Emirates, Qatar Airways and Etihad normally fly about one-third of the passengers from Europe to Asia and more than half of all passengers from Europe to Australia, New Zealand and nearby Pacific Islands, according to Cirium.
South Korea’s HanaTour Service said it has been cancelling group tours that include flights to the Middle East and it is waiving cancellation fees for affected customers. All Middle East-related tours for March will be suspended, it added.
In Thailand, the Ministry of Tourism forecast that if the conflict drags on for more than eight weeks, the country will lose a total of 595,974 tourists and 40.9 billion baht (US$1.29 billion) in tourism revenue.
