Written by Jonathon Cocks

In a previous blog (PANDEMICS, WARS, RECESSIONS: THE FRAGILE FUTURE OF GLOBAL TRAVEL, Aug-2025) an analysis of the last 35 years revealed that regional conflicts rarely result in major impacts to global travel, with the impacts localised to the region in conflict. It also revealed that regional recovery is normally fast once the crisis is over.

But the ongoing US–Israel–Iran conflict is not just a regional war – it is also a global fuel supply crisis.

Shipment of 20% of the world’s oil has ceased due to shipping blockades imposed by both Iran and the USA and productive capacity across the region has been impacted by directed military strikes on oil infrastructure. Jet fuel availability is tightening at a pace not seen in decades, and this will have meaningful short-term impacts, with potential longer-term implications for the travel and hospitality industry.

What does this mean in the near-term, and how is the Travel & Hospitality Industry responding?

1. Asia-Pacific (Most Severely Impacted)

Asian airlines has been the earliest and most visibly impacted due to their heavy reliance on Gulf-sourced fuel and a thin supply cushion.

• Vietnam: Vietnam Airlines has cut approximately 23 domestic flights per week to conserve physical fuel reserves and is the nation most at risk if fuel supply continues to be blocked.
• Myanmar: Airlines suspended domestic flights for parts of March 2026, with continued capacity cuts into April as local reserves reached critical lows.
• Pakistan: Import-dependent carriers have been forced to trim schedules as regional exporters like China and Thailand halted or capped jet fuel exports to protect their own domestic stocks.
• Malaysia: Batik Air Malaysia has slashed its domestic capacity by 36%, describing the move as a “crisis-mode” response to supply shortages.
• Hong Kong: Cathay Pacific and its subsidiary HK Express have announced capacity cuts (2% and 6% respectively) from mid-May through June 2026 to manage the supply-demand gap.

2. The Middle East

Despite being a primary production region, the conflict and logistics blockages have crippled local distribution.

• United Arab Emirates (Dubai): Significant limits have been placed on foreign flights into Dubai until May 31, 2026, to manage local fuel availability.
• Gulf Hubs Generally: Flight volumes across major Gulf-facing hubs have reportedly fallen to roughly one-third of normal levels due to operational constraints and network viability.

3. Europe & United Kingdom

While Europe has a larger strategic reserve, the “physical limit” is beginning to bite as the last shipments from the Middle East arrived in early April.

• United Kingdom: Considered highly vulnerable because it sources nearly half of its jet fuel from the Middle East. Carriers are reportedly operating on a “4-to-6 week” visibility window for fuel stocks.
• Italy: Specific airports including Milan Linate, Venice, Treviso, and Bologna implemented temporary refueling limits in early April 2026 due to supplier shortages.
• Wider European Market: Industry-wide, planned capacity increases of 5.4% for April were drastically scaled back to just 0.2% as airlines proactively cancelled flights to avoid being stranded by “systemic shortages” expected by May.

4. Other Reductions

Major international carriers have begun “trimming” frequencies or adding technical refueling stops to avoid drawing from depleted reserves at destination airports:

• Air New Zealand and Air India have both reduced frequencies on specific long-haul routes.
• United Airlines has taken steps to reduce flight frequencies and tighten operational expenditure in response to the tightening global supply.

Long-haul routes are especially vulnerable because they require more precise fuel planning, larger wide-body aircraft, and stable airport supply chains. According to industry analysis, disruptions linked to the Middle East conflict have already resulted in long-haul airlines considering technical stops, rerouting, or service cuts due to fuel scarcity and airspace constraints.

Increasing Airfares

Fuel surcharges are surging globally. Korean Air has imposed an international one-way fuel surcharge as high as US$415. Emirates Business & First Class now incur a one-way fuel surcharge of US$1,023 for routes to/from the Americas.

Reducing Demand

Analysts estimate that each US$0.10/gallon rise in fuel prices reduces arrivals by 2–4% within 30 days, highlighting a clear and immediate sensitivity in demand for long-distance travel.

Declining Hotel Bookings

Hotels in major international destinations, from Dubai to London to New York, have reported 18–22% declines in advance reservations in Q1 2026 compared to the previous year. Even traditionally resilient mid-range hotels in the UK experienced their worst March performance in 6 years.

Disruptions to Tourism Services

Fuel shortages are also creating operational disruptions within destinations, complicating the travel experience even after passengers arrive. In Thailand, the taxi ecosystem at Bangkok’s Suvarnabhumi Airport is under significant strain, with the number of active large SUV taxis dropping from more than 5,000 to roughly 2,500 vehicles, as drivers avoid operating without confidence in refuelling availability.

Will there be long term consequences?

Historically, global air travel has been remarkably resilient, but major fuel price surges have consistently caused noticeable “dips” or “stagnations” where growth fell below its normal trajectory. The long-term trend for aviation is roughly 5% annual growth. However, over the last 50 years there have been four major fuel crisis periods and during these four periods, travel typically deviated from that line.

1. 1973–1974 (OPEC Embargo)

• The Trend Shift: Before 1973, air travel was in a “golden age” of double-digit growth. The embargo caused a sharp stagnation.
• The Result: Global passenger numbers didn’t necessarily plummet in absolute terms, but the growth rate collapsed. In the U.S., domestic travel growth dropped from 10% to near 0% as airlines slashed schedules and retired fuel-heavy jets (like early 747s) prematurely.

2. 1979–1980 (Iranian Revolution)

• The Trend Shift: This was the first time in the modern era that global air travel saw an absolute year-over-year decline.
• The Result: The surge in fuel prices, combined with a global recession, pushed travel 20% below what was projected. It took nearly until 1987 (seven years later) for the industry to fully return to its pre-1979 growth trend line.

3. 2008 (Commodity Super-Cycle & GFC)

• The Trend Shift: This was a “double-whammy.” High fuel prices in early 2008 squeezed airlines, followed immediately by the Global Financial Crisis (GFC).
• The Result: In 2009, global demand fell by 3.5%, the largest yearly decline since WWII. For the first time, airlines began aggressively cutting “Available Seat Miles” (capacity) to stay profitable, moving away from the “growth at all costs” model.

4. 2022 (Russia-Ukraine War)

• The Trend Shift: This surge occurred while the industry was still in a “rebound” phase from COVID-19.
• The Result: Instead of causing a drop, the 2022 surge slowed the recovery. Travel remained below 2019 levels longer than forecasted because high fuel surcharges made tickets significantly more expensive, dampening the “revenge travel” boom.

Although the 35% increase in crude oil seems smaller compared to the 70s, the current crisis is unique. While the price hasn’t tripled, the physical availability has plummeted due to the blockade. This is why we are seeing flight reductions even though the price spike is actually lower than the 2022 peak ($127).

Adapting to a New Operating Reality

In the near term, fuel supply instability is reshaping the global Travel & Hospitality landscape in ways that extend far beyond higher operating costs. As airlines confront fragile fuel reserves, unpredictable international refuelling conditions, and mounting long-haul vulnerabilities, the entire aviation ecosystem is being forced into more defensive, reactive modes of operation.

While the sector has proven its resilience through past crises, the current shock underscores an urgent need for stronger energy diversification, strategic fuel planning, and cross-border coordination. The months ahead will be defined by how quickly industry stakeholders can adapt to this evolving risk landscape and how effectively they can maintain traveller confidence amid a period of heightened but manageable uncertainty.