Airline stocks faced a steep decline across global markets on Monday as the ongoing conflict in Iran triggered a surge in oil prices, creating a ripple effect throughout the aviation sector. In Asia, significant drops were recorded in the shares of major airlines: Korean Air fell by 8.6%, Air New Zealand declined by 7.8%, and Cathay Pacific experienced a 5% loss. European airlines were similarly affected, with Air France-KLM, International Airlines Group (IAG), and Lufthansa seeing their stocks slide between 4% and 6%.
The spike in oil prices has led to a dramatic increase in airfares, with notable examples including a Seoul-to-London flight on Korean Air, which surged from $564 to an astonishing $4,359 within just one week, according to data from Google Flights. This surge comes as more than 37,000 flights to and from the Middle East have been cancelled since the conflict erupted on February 28. Airlines are now being compelled to reroute flights through longer pathways, resulting in greater fuel consumption and further straining an already challenged industry.
The implications of this crisis could become increasingly severe. Deutsche Bank issued a warning that airlines around the world may be left with no choice but to ground thousands of aircraft if the situation does not improve in the near future. This situation poses a particularly serious threat to financially weaker airlines, which could face the risk of shutting down entirely.
Jet fuel prices have been escalating even more rapidly than crude oil prices, placing additional pressure on airlines that often allocate as much as 25% of their operating costs to fuel expenses. Gulf-based carriers such as Emirates, Qatar Airways, and Etihad, which typically manage about one-third of the passenger traffic between Europe and Asia, are particularly susceptible to disruptions in global travel dynamics. Analysts predict that the ongoing rise in fares could deter travel demand well into 2026, further complicating the recovery of the aviation sector.
