Asian airlines face lasting fuel strain as hedges expire at higher prices

what happened

Asia-Pacific airlines are becoming more exposed to expensive jet fuel as older hedging deals run out, forcing carriers to decide whether to secure new coverage at elevated levels, Reuters reported, citing industry executives.

Jet fuel in Singapore trades around $148 a barrel, below nearly $180 at the close of October yet far above roughly $85 before the events that unfolded in late February. Wong Hong, head of the Association of Asia Pacific Airlines, whose group counts 18 regional members, said fuel now accounts for about 33% of operating costs, versus 25% that IATA estimated last year.

Singapore Airlines saw its fuel bill climb 56% in the six months to September, reaching S$3.97 billion, while operating profit fell 29% even as revenue reached a record. Hedging brought its effective price down to $145 a barrel, though its CFO said such protection is only partial.

why it matters

For markets, the story signals persistent cost pressure on airline margins and a possible drop in passenger demand if fares cannot keep pace with fuel costs. The report also cites Brent at roughly $90 to $100 a barrel, tying the sector closely to crude price moves.

market impact

Airlines: costlier jet fuel squeezes margins and pressures fares, weighing on carrier shares

• ▼Asian airline stocks pressure down — higher fuel costs cut operating profit at carriers

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