AUCKLAND, New Zealand — Air New Zealand on Tuesday began raising domestic, short-haul and long-haul fares as jet fuel prices surged and fare pressure started to ripple through the industry, March 10, 2026.
The carrier said the speed of the fuel move forced it to pass through part of the increase, suspend its fiscal 2026 guidance and warn that more pricing or network changes could follow if costs stay elevated.
According to Reuters’ March 10 report on the first broad fare increases, Air New Zealand lifted one-way economy fares by NZ$10 on domestic routes, NZ$20 on short-haul services and NZ$90 on long-haul flights, making it one of the first carriers to push through broad ticket-price increases since the latest Middle East disruption. The report also said fuel remains the industry’s second-largest expense after labor, typically accounting for about one-fifth to one-quarter of operating costs.
Why airfare hikes are spreading faster this time
In a market announcement to investors, Air New Zealand said it had already made “initial fare adjustments” and could take further pricing action or alter its network and schedule if elevated costs persist. The airline said it is 83% hedged against Brent crude for the second half of the financial year, but that protection does not shield it from the refined-fuel margin known as the crack spread, which it said widened from about US$22 a barrel before the conflict to as high as US$115.
The broader fuel backdrop is moving just as fast. IATA’s Fuel Price Monitor said the global average jet fuel price last week rose 58.4% from the previous week to US$157.41 a barrel, a jump that sharply narrows airlines’ room to absorb higher costs without touching fares. In the United States, the Argus U.S. Jet Fuel Index stood at US$3.67 a gallon on March 9, underscoring that the squeeze is not limited to one market.
That mix of expensive fuel, thin inventories and uneven hedging is why airfare hikes can spread faster than travelers expect. Carriers with deeper hedges can buy time, but airlines still exposed to refined jet fuel rather than crude alone have fewer options: accept lower margins, cut capacity, or start passing through costs route by route.
Air New Zealand may be among the clearest early movers, but the wider pattern is already visible. Reuters said Vietnam Airlines has asked for relief from an environmental tax on jet fuel, while Cathay Pacific continues to review fuel surcharges monthly, a sign that airlines are using different tools to protect margins without shocking demand all at once.
Airfare hikes echo earlier fuel shocks
The pattern is familiar. In March 2022, a Reuters dispatch after Russia’s invasion of Ukraine warned that jet fuel had surged to near 14-year highs just as air travel was reopening. Days later, another Reuters report showed carriers leaning on hedging and fuel surcharges to soften the blow. Air New Zealand itself said in its 2022 annual result that high fuel prices and reduced flying contributed to a full-year loss.
The difference now is timing. The latest spike is hitting after airlines rebuilt schedules and recovered some pricing power, which may give some carriers a better chance of holding early increases. But if jet fuel stays elevated and conflict-driven disruption spreads, the industry will again face the same blunt choice it faced in earlier shocks: protect market share, or protect margins.
For passengers, that means today’s airfare hikes may be only the opening move. A quick pullback in fuel could limit the damage to a first round of increases. If not, more airlines are likely to test higher fares, lighter schedules or both before the market settles.
