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Korean Air has activated emergency management protocols as soaring jet fuel costs, driven by the ongoing US-Israel war with Iran, send shockwaves through the global economy.

A spokesperson for the national carrier said Tuesday that the airline will roll out "internal cost-reduction measures" to safeguard its finances and maintain "stability amidst rising fuel prices and global economic uncertainty."

The move places Korean Air among a growing list of Asian airlines taking steps to blunt the financial fallout from the Iran conflict.

Since fighting erupted on 28 February, crude oil prices have jumped more than 50%, while jet fuel costs worldwide have more than doubled.

Airlines have historically turned to similar crisis strategies during periods of upheaval, including the Covid-19 pandemic, according to Tan Chi Siang of consultancy PwC Singapore.

Asian carriers are facing what Tan described as a "double shock" — a spike in global oil prices compounded by a regional shortage of jet fuel supplies.

South Korea

South Korea remains particularly exposed to disruptions in Middle Eastern energy flows due to its heavy dependence on Gulf oil imports.

In recent days, several domestic carriers — including Korean Air, Asiana Airlines and Busan Air — have shifted into emergency management mode.

Such measures typically focus on internal adjustments, including delaying upgrades and scaling back investments, though some airlines may also cut flight frequencies to reduce expenses, Tan said.

Korean Air staff were informed of the changes through an internal memo reviewed by the BBC.

Vice Chairman Woo Ki-hong told employees the company is bracing for "a surge in fuel expenses."

He said cost-cutting efforts would be tied to oil price movements and emphasized the initiative is "not merely a one-time" action but an opportunity to "strengthen our structural foundation."

Mainland China and Hong Kong

China, despite its status as a major energy producer, remains the world’s largest oil importer, leaving its aviation sector vulnerable to global price swings.

China Eastern Airlines warned Monday that ongoing global disruptions could weigh on its operations this year.

The carrier said shifting trade conditions and "geopolitical conflicts or wars will have a relatively significant impact" on aviation performance.

Fuel surcharges have already risen across many Chinese airlines since the Iran war began.

Authorities have also reportedly instructed domestic refineries to halt fuel exports in an effort to stabilize prices at home.

In Hong Kong, Cathay Pacific confirmed that fuel surcharges are now applied to all flights, contributing to sharp increases in ticket prices.

Japan

Japan’s aviation sector, a key global transport hub and aircraft manufacturing center, has so far seen limited immediate disruption.

All Nippon Airways said it would not raise fuel surcharges for tickets issued in April and May, as pricing had been locked in before the Iran conflict escalated.

A spokesperson said the short-term impact remains "limited" due to existing surcharges and prior hedging measures.

Japan Airlines said it has not implemented specific measures related to fuel shortages.

However, the airline noted that fares on some routes — particularly between Japan and Europe — have climbed amid increased demand following the suspension of Middle East routes.

India

India’s aviation market has been significantly affected by the suspension of flights to the Middle East, a key international corridor.

Despite cancellations, demand for travel to the region persists, with airlines such as Air India issuing daily updates on newly scheduled services.

India’s aviation authority said it expects domestic flight volumes to fall by about 10% between March and October.

On 23 March, the government temporarily lifted fare caps, allowing airlines to raise ticket prices as fuel costs climb.

The sector is also contending with ongoing restrictions on using Pakistani airspace, imposed over the past year amid bilateral tensions.

Singapore

Singapore Airlines and its low-cost arm Scoot have increased fares in response to rising fuel expenses, a spokesperson told the BBC.

Fuel remains the group’s largest cost component, accounting for roughly 30% of recent expenditures.

The fare hikes "defray" but do not fully offset the surge in costs, the spokesperson said.

Singapore’s civil aviation authority has also delayed the introduction of a planned green fuel levy, originally scheduled for April 2026, citing the economic impact of the Iran conflict.

The levy is intended to support the purchase of sustainable aviation fuel derived from renewable sources and waste products such as used cooking oil and animal fat.

Aviation plays a critical role in Singapore’s economy, contributing about 5% to its GDP.

Broader Industry Impact

Elsewhere in Asia, governments and airlines are grappling with mounting fuel concerns.

On 24 March, the Philippines declared a national energy emergency — the first country to do so in response to the Iran war.

President Ferdinand Marcos warned that grounding aircraft due to fuel shortages is a "distinct possibility," after some airlines were told they could not refuel abroad.

Vietnam’s aviation authority has cautioned that jet fuel shortages could emerge as early as April due to delayed shipments.

Vietnam Airlines has already suspended several domestic routes. The country imports nearly 90% of its oil from the Middle East.

Smaller Carriers Under Pressure

Industry analysts say larger airlines are better positioned to weather the crisis.

They can redeploy aircraft to capture demand on routes vacated by Gulf carriers, according to Bryan Terry of Alton Aviation Consultancy.

Singapore Airlines has added flights to London, while Australia’s Qantas Airways has increased service to Europe — routes typically dominated by Middle Eastern airlines.

Major carriers are also shifting long-haul aircraft to markets with stronger demand and higher-paying customers, Terry said.

Qantas confirmed it is reallocating larger planes, usually used for U.S. routes, to Europe as demand rises.

Smaller airlines, however, face steeper challenges. Budget carriers such as Jetstar have begun scaling back flight operations to cope with the pressure.