Iran’s foreign minister said on Friday the Strait of Hormuz is “completely open” to all business vessels following a ceasefire agreement between Israel and Lebanon, although uncertainty stays amid the continued American blockade of Iranian ports. Even if the agreement stays in place, experts say it is going to take weeks for oil shipments to choose up again, while it could take for much longer for jet fuel to succeed in pre-war production levels because of injury to refineries within the Middle East.
Increase in fuel results in higher ticket prices
The energy crisis triggered by the Iran war and the effective seven-week closure of the Strait mean Canadian airlines have already begun to factor rising costs into their prices and can proceed to achieve this for a minimum of several months, said independent aviation analyst Rick Erickson. “Prices will go up,” he said. “In the summer of 2026 … there will be no deals,” he said. “And believe me, you will have to pay.”
Canada’s major airlines have increased gross fares and added fuel surcharges of between $25 and $60 per ticket on some flights. Air Canada announced higher baggage fees this week – from $35 to $45 for the primary checked bag in basic economy class on domestic, US and solar destination flights, for instance.
The airline also confirmed plans to suspend flights between June 1 and October 25, including from Toronto and Montreal to New York’s JFK Airport.
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“Since the start of the Iran conflict, fuel prices have doubled and some routes and flights with lower profitability are no longer economical and we are making schedule adjustments accordingly,” Air Canada spokesman Christophe Hennebelle said in an email Friday. He said the airline will proceed to fly to New York metropolitan area airports 34 times every day (up from 38) from six cities across Canada. The company said the 1000’s of affected customers could be contacted with alternative travel options.
Air Canada can also be suspending flights between Toronto and Salt Lake City from June 30 until sometime next 12 months. Flights between Fort McMurray, Alta., and Vancouver are suspended starting May 28, while the Toronto-Yellowknife route is suspended effective Aug. 30. Additionally, a planned route between Montreal and Guadalajara, Mexico, shall be canceled.
The reduced flight network underscores how airlines expect that even Friday’s apparent opening of the strait is not going to lower jet fuel prices through much of the spring and summer.
Airlines world wide have needed to cut their schedules as rising fuel costs make some routes unprofitable. Lufthansa – a partner of Air Canada through the Star Alliance global airline network – said Thursday it will progressively reduce flight volumes on its important routes and ground 27 aircraft from its CityLine subsidiary starting Saturday. KLM announced it will cancel 160 European flights to and from Amsterdam’s important airport next month. Numerous airlines in Asia and the Middle East have also cut their capacities.
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Canada has shielded itself, but global impacts loom
North American airlines draw largely from refineries in Canada and the U.S. and remain higher shielded from fuel shortages than Gulf-dependent Asia and Europe. However, it’s possible you’ll find that connecting options are more limited as airlines abroad in the reduction of on less lucrative trips and use less efficient aircraft. According to the International Energy Agency, the Middle East typically supplies three-quarters of Europe’s net imports of jet fuel. On Thursday it was said that there could possibly be shortages of kerosene in several European countries inside six weeks.
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Canada remains to be higher positioned: greater than half a dozen refineries within the country produce kerosene-based aviation fuel. According to John Gradek, who teaches aviation management at McGill University, greater than four-fifths of the jet fuel utilized in Canada is produced domestically. “Why do we pay Middle East prices for fuel when we are self-sufficient in fuel? The answer is the same as when we talk about gasoline for your car: our pricing models are based on the world market price,” he said. “This is the worst situation we have seen with aviation fuel in history.”
Air Canada spokesman Peter Fitzpatrick said the airline “does not see any imminent supply issues.”
WestJet said it has not yet made any changes to its flight network. “However, we are evaluating our summer flight schedule and may adjust flights to balance fuel supplies,” said spokeswoman Julia Kaiser.
Gradek said even when damage to Gulf refineries is lower than expected, plant repairs, production ramp-ups and long transportation times will mean prices will “linger for a while” attributable to reduced oil and jet fuel flows.
Expensive travel is prone to remain
The inflated tariffs will proceed for longer if ships don’t comply with passage through a waterway where Iranian ships and ports remain closed attributable to an American blockade that US President Donald Trump said on Friday “will remain in full force” until the White House reaches a longer-term agreement with Tehran.
Given higher prices and the specter of travel disruption, some consumers could also be hesitant to plan a planned trip abroad, but normally the urge to travel stays strong. “Consumer demand for air travel appears broadly stable amid global uncertainty and rising fuel (and airfare) costs,” a Stifel consumer survey said this week.
The conflict has also created rare opportunities for airlines. Air Canada has expanded its Toronto-Delhi service to twice every day and deployed larger planes on some Toronto-London-Mumbai flights last month, while airlines within the Middle East have scaled back flights.
