KUALA LUMPUR — Asia-Pacific airlines face more expensive fuel protection as older hedging contracts expire, Reuters reported from the Association of Asia Pacific Airlines assembly on November 13.
Jet fuel was trading near US$148 a barrel, compared with about US$85 before the Iran war began in February, Reuters reported. Association Director General Wong Hong put fuel at about one-third of airline operating costs.
Surcharges and New Cover
Japan Airlines (JL) plans a domestic fuel surcharge from April 2027, executive Ross Leggett told Reuters. All Nippon Airways (NH) is considering one; its chief executive, Juichi Hirasawa, said fuel costs would exceed initial fiscal-year plans by roughly US$626m (¥100bn).
Air Astana (KC) intends to rebuild hedging for fuel bought outside Kazakhstan, about 30% of its typical annual total, Chief Executive Ibrahim Canliel said.
Hedging can cushion a price rise while existing cover lasts. Replacing that cover at higher prices reduces the benefit of contracts arranged before the increase. Airlines must then balance protection against further rises with the risk of locking in costs before prices fall.
Featured image: Aner Ortiz de Zarate/Airways
