Jet fuel rose 106.6% year-over-year (YoY), reaching its highest level in more than 23 years. This has pushed cargo yields up, creating an inflationary pricing environment. Fuel costs—not demand—are now the primary driver of freight pricing.
- For carriers: margin protection through surcharges. The world’s 20 largest airlines are cancelling flights, reducing global capacity overall.
- For shippers: higher costs and volatility even in a soft market environment.
- Consumers will be forced to absorb the extra costs of jet fuel through new fees for bags, seats, etc.
Asian governments are taking defensive measures to prevent fuel shortages—subsidies, export curbs, and work-from-home mandates, etc.—but these are largely short-term solutions that won’t prevent deeper trouble long term.
Fatih Birol, Head of the International Energy Agency, estimates that Europe has six weeks of jet fuel remaining.
