Domestic Airfares Skyrocket Amid Fuel Price Hike and Supply Chain Disruptions
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The escalating tensions in the Middle East have disrupted fuel supply chains, leading to a rise in average domestic airfares by 15-20%. This has resulted in airlines discontinuing their low-cost options.
Demand and Supply Imbalance
The disruption has severely affected the airlines as domestically, Jet A1 fuel only caters to around 20% of the demand. This has forced them to depend on imports from countries that are currently imposing export restrictions such as China, South Korea, and Thailand, as stated in a fresh report by the Airports Corporation of Vietnam.
To combat this situation, airlines have started consolidating flights and suspending overnight operations. This strategic move is aimed at increasing the number of passengers per flight and optimizing load factors.
Impact on Aviation Operations
As a consequence of these adjustments, there has been a significant reduction in the number of takeoffs and landings at airports managed by the Airports Corporation of Vietnam (ACV). The unavailability of affordable tickets has led to a decline in passenger demand, especially in the leisure travel segment, as per the report.
The International Air Transport Association has reported that jet fuel prices in the Asia-Pacific region surpassed $207 per barrel in mid-April, which is 2.4 times the average price in 2025. The airlines are confronted with further challenges due to fluctuating exchange and interest rates that are negatively impacting their operational efficiency.
Passenger Statistics
Despite these challenges, in the previous year, ACV airports welcomed 120.3 million passengers, marking a 9.4% increase. Among these, international passengers accounted for a 14% rise, reaching 47.1 million.
Questions & Answers
What has caused the rise in average domestic airfares?
The escalating tensions in the Middle East have disrupted fuel supply chains, leading to a hike in average domestic airfares.
How are airlines dealing with the disruption in fuel supply chains?
Airlines are consolidating flights and suspending overnight operations to increase the number of passengers per flight and optimize load factors.
What is the impact on passenger demand due to the rise in airfares?
The unavailability of affordable tickets has led to a decline in passenger demand, especially in the leisure travel segment.