Airline stocks across Asia and Europe extended losses on Tuesday as the US and Israel intensified air strikes against Iran, raising concerns over higher fuel costs and prolonged disruption to key air routes.
Investors reacted to a sharp rise in oil prices, which have climbed by around 30% since the start of the year amid the escalating conflict. The increase threatens to drive up jet fuel costs, a major expense for airlines, potentially squeezing profits.
Asia-Pacific Carriers Hit Hard
Shares in Qantas Airways fell for a second consecutive day, closing down 1.8%. Chief executive Vanessa Hudson said the airline had “pretty good” fuel hedging in place but acknowledged the oil price spike was significant for the industry.
Qantas previously said it had hedged 81% of its fuel needs for the second half of its financial year ending 30 June.
In Japan, Japan Airlines shares dropped 6.4% — their steepest fall since April 2025. Chief financial officer Yuji Saito said the airline planned to adjust international fuel surcharges, although he did not specify when.
Korean Air fell 10.3% after trading resumed following a public holiday — its biggest decline since March 2020.
Shares in Cathay Pacific closed around 3% lower, while China’s major state-backed carriers — Air China, China Eastern Airlines and China Southern Airlines — all ended between 2% and 4% down in Hong Kong and Shanghai.
Taiwan’s China Airlines fell 3%, and EVA Air dropped 2.5%.
European Airlines Also Under Pressure
In Europe, shares of Wizz Air and International Airlines Group — owner of British Airways — both fell about 5%.
Airlines are facing operational strain as well as higher fuel costs. Major Gulf aviation hubs, including Dubai — the world’s busiest international airport — remained closed for a fourth day, leaving tens of thousands of passengers stranded.
With Russian airspace largely closed to Western carriers since the invasion of Ukraine in 2022, the closure of Middle Eastern flight corridors has further restricted available routes. Many airlines are being forced to take longer detours, increasing flight times and fuel consumption.
Shift in Passenger Demand
At the same time, some carriers have reported a surge in bookings as travellers switch away from Middle Eastern airlines. Checks of airline websites showed rising fares on routes such as Hong Kong to London, reflecting increased demand for alternative connections.
Analysts say uncertainty over the duration of the conflict could prompt further cancellations or itinerary changes, adding to volatility in airline markets.
The industry now faces a combination of higher costs, airspace constraints and unpredictable demand — factors that are likely to weigh on share prices in the near term.
