The prospect of lower priced airfares stemming from a ceasefire between Iran, the US and Israel hinges on how durable the pause in violence is, and how soon travel warnings for the Persian Gulf are lifted.
US President Donald Trump’s two-week halt in the conflict with Iran won’t likely change international long-haul ticket prices, as the shortfall of jet fuel grips the global aviation sector.
Flights from Sydney to London Heathrow from June 1 to June 17 – booked this week – range from $1755 for a round trip on China Eastern to $4485 through Singapore Airlines, according to Google Flight data. The same flights a year ago ran approximately $1350 to $2450 in June 2025, according to Google data.
The elevated cost is linked directly to the fuel charges for the airlines, which are second only to labour costs.
A year ago, jet fuel traded as low as $US75.18 a barrel in Singapore. On Thursday, the same barrel cost $US191.56, after rising as high as $US233.47 on March 30, as Iran hit its Persian Gulf neighbours in response to the US- and Israel-led attack.
The International Air Transport Association calculates that fuel makes up on average about 27 per cent of airlines’ operating expenses.
Not only has the war removed refining capacity, Iran has effectively taken control of the Strait of Hormuz, adding cost and uncertainty to oil shipments from its foe, Saudi Arabia, to the world.
Even with a ceasefire announced on April 8 and the prospect of a resolution, there is a gap in the supply line for airlines, which must make up the difference through added ticket costs, cuts to capacity, or the cancellation of services.
Qantas, Jetstar and Virgin have hiked costs and reduced capacity on some routes since the war began. Qantas has shifted capacity away from North America to serve key Australia-Europe routes.
Gulf carriers such as Dubai-based Emirates, Abu Dhabi-based Etihad and Doha-based Qatar Airways have been forced to dramatically scale back flights, amid persistent airspace closures.
Australian Institute of Petroleum CEO Malcolm Roberts said Australia had good stocks of jet fuel at the start of the conflict with crude on hand for refining as well as shipments en route from the Mideast to China. “But now we’re really well past that point,” he said. “And there’s been no resupply from the Mideast.”
Typically, the Middle East contributes 14 million barrels of crude oil, which includes about 4.5 million barrels of refined product such as jet fuel, AIP numbers show. Since the conflict kicked off on February 28, the world has lost 10 million barrels a day in crude.
Roberts said the price spikes in airfares have helped ease demand for jet fuel. At the same time, the government has not been forced to tap jet fuel reserves; Australia currently has 30 days of jet fuel in reserve, or 28 per cent above the required volume.
Despite March 11 reports that China would restrict crude and petrol, Roberts said it doesn’t seem that jet fuel exported from China is “affected at this point”.
CAPA Centre for Aviation’s head of research Simon Ellsgood said that Australia’s jet fuel reserves have remained steady: “Partly because … it takes about six weeks for oil that is extracted out of the Middle East to end up in fuel bunkers in Australia.”
So Australia hasn’t seen the same drawdown of oil, petrol and diesel that would be seen in refining hubs elsewhere.
“We will be the last to feel fuel shortages, but we will also be the last to feel fuel price relief because we’re at the end of the line.”
Another part of the airfare equation is the risk for travellers. The Department of Foreign Affairs and Trade’s recommendation for Australians to avoid Gulf states means that anyone booked to the region won’t be covered by insurance.
Australians are instructed by DFAT’s Smartraveller site to stay away from the Middle East, noting: “Even if you don’t plan to leave the airport, do not transit through these countries.”
That puts a cloud over flights booked on Qantas-partner Emirates, which has scaled back its own flights to capital cities. Virgin services on Qatar Airways cancelled flights until mid-June as the conflict plays out.
Cinzia Burnes, executive director at Helloworld travel agency, said the DFAT warning “reduces the option and the capacity to book any of the Gulf carriers”.
If the ceasefire holds and turns into something like peace, Burnes expects significant sales from Gulf carriers.
“As soon as that’s lifted, which we really hope it will be soon, that will definitely, have an impact,” Burnes said. “Carriers such as Emirates, Qatar and Etihad coming back online will be very keen to motivate the market to travel with them again.”
IATA director general Willie Walsh, speaking in Singapore, said that nobody knows what’s going to happen in two or three months.
“But certainly the forward curve [showing oil price over time] would suggest prices will come down and get back to where they broadly were at the end of February – by the end of this year.”
“I fully expect the Gulf hubs to recover, and recover quickly,” he said.
Walsh is not alone. Last week Malaysia-based low-cost carrier AirAsia X reaffirmed plans to develop the airport of Gulf nation Bahrain as a key strategic hub between Asia, the Middle East and Europe. It set the date of June 26 for the launch of services “with optimism that the conditions in the region will normalise by then”.
Helloworld’s Burnes said that, if history is any guide, restoring consumer confidence once the conflict ends won’t take long.
“In our experience, having been through the Gulf War and everything after that – SARS, volcanoes, COVID, the September 11 attacks, it takes 90 days for the consumer to regain confidence and forget all about it.”
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Chris Zappone is a senior reporter covering aviation and business. He is former digital foreign editor.Connect via X, Facebook or email.
