South Korean Airlines Enter Emergency Mode as Jet Fuel Prices Double

Surging jet fuel prices caused by the US-Israel war with Iran have pushed South Korea's major airlines into emergency management mode, forcing carriers to cut flights and implement drastic cost-reduction measures.

The crisis traces its roots to February 28, 2026, when hostilities erupted in the Middle East and effectively shut down the Strait of Hormuz, one of the world's most critical oil transit chokepoints. Since the start of the conflict, Brent crude oil prices have climbed by more than 50 percent, surpassing $110 per barrel. The impact on aviation fuel has been even more severe. According to the International Air Transport Association (IATA), jet fuel prices in the Asia-Oceania region reached nearly $200 per barrel by March 20, more than doubling from their February levels. In some regional spot markets, Jet A-1 prices peaked above $230 per barrel, representing a roughly 135 percent increase.

South Korea is especially vulnerable to this energy shock because the country depends heavily on oil and gas imports from the Persian Gulf. Unlike major oil-producing nations that can offset global price swings with domestic supply, South Korea must import virtually all of its crude oil. The combination of record-high fuel costs and a weakening Korean won against the US dollar has created a punishing cost environment for airlines, as fuel typically accounts for around 30 percent of total operating expenses.

The first airline to take drastic action was T'way Air, a budget carrier that implemented an emergency management system on March 16. The low-cost airline, already operating on thin margins, determined that the rapid escalation in fuel costs required immediate structural adjustments to avoid unsustainable losses.

Asiana Airlines, the country's second-largest carrier and a subsidiary of Hanjin Group, followed on March 25. In an internal notice, Asiana management cited the sharp surge in international oil prices and expanding external uncertainty as the reasons for activating emergency protocols. The airline stated it had conducted a company-wide review of its cost structure before making the decision.

On March 31, Korean Air, the nation's flag carrier and largest airline, announced it would also transition to an emergency management system starting in April. Vice Chairman and CEO Woo Ki-hong informed employees through an internal memo that the company would implement phased response measures tied to specific oil price levels. He warned that if the abnormally high oil price situation persists, the airline's ability to meet its annual business targets would face serious disruption. He emphasized that the measures were not a one-time cost-cutting initiative but rather an effort to strengthen the company's structural foundations.

All three major carriers that have entered emergency management, Korean Air, Asiana Airlines, and Air Busan, are owned by the South Korean conglomerate Hanjin Group. This concentration of ownership means the crisis affects a dominant share of the country's aviation capacity under a single corporate umbrella.

Budget airlines have been hit particularly hard due to their smaller scale and narrower profit margins. Jin Air announced the cancellation of 45 flights in April, affecting routes from Incheon to destinations including Guam and Nha Trang. Air Premia, which specializes in medium-to-long-haul routes, is cutting approximately 50 flights between April and May, suspending services to Los Angeles, San Francisco, Bangkok, and New York. The carrier had also announced plans to suspend 26 flights on the Incheon to Los Angeles route from April 20 to May 31, along with six flights on the Incheon to Honolulu route.

Eastar Jet plans to suspend 50 flights on the Incheon to Phu Quoc route from early May through the end of the month, citing limited local refueling conditions in Vietnam as an additional complication. Air Busan and Aero K Airlines have also reduced services on several international routes starting in April. The three largest low-cost carriers in South Korea, Jeju Air, T'way Air, and Jin Air, are reportedly considering further cuts on select Southeast Asian routes as the crisis deepens.

The financial burden on passengers is mounting rapidly. South Korean airlines use a 33-tier system for fuel surcharges, with the applicable level announced on the 16th of each month for the following month. In March, surcharges stood at Tier 10. By April, they had jumped to Tier 18. On long-haul routes to the United States, fuel surcharges that were around 100,000 Korean won (approximately $75) per one-way fare in March are projected to reach 500,000 won by May, a fivefold increase. Once surcharges exceed the highest tier in the system, airlines have no further mechanism to pass additional costs on to travelers, meaning they must absorb the remaining expense.

The reduction in international flights is also creating ripple effects on domestic travel. With fewer international services available, demand for domestic routes, particularly to popular destinations like Jeju Island, is expected to rise, pushing up fares and reducing seat availability.

The broader context of this crisis extends well beyond South Korea. Airlines across Asia are facing similar pressures. Vietnam's carriers have announced significant flight reductions from April. Air New Zealand has canceled more than 1,100 flights through early May. The Philippines declared a national energy emergency on March 25. China and Thailand have imposed restrictions on refined oil exports to secure domestic supplies. Even US carriers like United Airlines have begun canceling unprofitable services as fuel costs climb.

Industry analysts warn that even if the Middle East conflict were to de-escalate immediately, the lag effect of fuel pricing means elevated costs and reduced capacity are likely to persist for several months. The aviation sector faces a prolonged period of uncertainty, with the potential for further fare increases, additional route suspensions, and continued financial strain on carriers operating in the Asia-Pacific region.

The South Korean government has responded by unveiling plans to expand fuel tax cuts and develop phased economic emergency measures to shield the broader economy from the ongoing energy shock. However, for the aviation industry specifically, the path forward remains highly dependent on the trajectory of the Middle East conflict and the eventual reopening of stable oil supply routes through the Strait of Hormuz.