Korean Air’s Boeing 777F cargo aircraft is fueled with sustainable aviation fuel, Sept. 5, 2023. Courtesy of GS Caltex
International flight tickets issued in April could cost more than 100,000 won ($75) higher than those purchased this month for the same routes, as Korean Air and low-cost carriers face mounting pressure from surging aviation fuel costs following the U.S.-Israeli strikes on Iran, according to data and industry officials Sunday.
The anticipated increase is tied to a sharp rise in fuel surcharges — additional fees to cover fluctuating fuel costs. The figure for April is set to be announced Monday.
As the Middle East crisis shows signs of becoming prolonged, international oil prices have climbed steeply, raising concerns that fuel surcharges attached to airline tickets will also sharply jump next month.
Airlines adjust fuel surcharges monthly based on international aviation fuel prices. For Korean Air, the surcharge currently ranges between 13,500 won and 99,000 won for tickets issued in March. The upper range is an increase of around 30 percent from the previous month.
Asiana Airlines’ fuel surcharge is also increasing. The surcharge in March soared to as high as 78,600 won, up 19 percent from the previous month. The figure for Jeju Air also increased 22 percent during the same period.
An electronic signboard shows the strengthening U.S. dollar against the Korean won at a dealing room of Woori Bank in Seoul, Friday. Yonhap
It is possible that the upper range could more than double for major airlines next month in the wake of the international oil price shock. The fuel surcharge for Korean Air surged to as much as 325,000 won in July 2022 due to the Russia-Ukraine war.
Industry officials warn that such increases could significantly raise ticket prices, particularly for long-haul routes.
“Ticket prices may rise by hundreds of thousands of won due to the rapidly increasing fuel surcharge,” an industry official said.
“The situation remains worse for LCCs, as customers are more price-sensitive to them than to full-service carriers. This means LCCs cannot excessively raise ticket prices for fear of an abrupt drop in travel demand.”
Adding to the pressure is the sharp depreciation of the Korean won against the U.S. dollar.
Airlines pay many of their key expenses, such as aircraft leases, fuel purchases and maintenance costs in dollars, so a stronger dollar comes as a major financial burden to most carriers.
The won-dollar exchange rate hit the 1,500-won level Friday, and continues to hover around that level.
