Cathay Pacific to review surcharge fortnightly as jet fuel costs soar: Extra $91 on some NZ tickets from April 1

Cathay Pacific says jet fuel price volatility means it will review its fuel surcharge more often, with price changes impacting New Zealand from Tuesday.

Tickets bought in New Zealand for journeys for flights between Australia, New Zealand and Chile will cost an extra $91 from April 1.

For flights between Hong Kong and South Asia, prices will increase by $43.

For all others, flights for tickets purchased in New Zealand will cost an extra $23.

The volatile Middle East situation was having a major impact on the price of jet fuel and placing pressure on airlines, Cathay Pacific said overnight.

The Hong Kong airline said the fuel surcharge was an important tool to mitigate and recover a portion of its incremental fuel costs.

“To enable a more agile response to the volatile jet fuel prices, we will review and revise the fuel surcharge every two weeks to better capture jet fuel price movements in either upward or downward direction,” the airline added.

It was previously reviewed monthly.

“This increased frequency of review is intended as a temporary measure and will be revisited when the Middle East situation stabilises.”

Cathay Pacific also said it was adding more flights to London, Paris and Zurich to cater for an upsurge in market demand for European destinations.

Cathay Pacific has cancelled all flights to and from Dubai up to and including May 31.

A Cathay Pacific flight touching down in Christchurch. Photo / Supplied

The Iran-Israel-United States war and stultification of Strait of Hormuz oil trade has sent jet fuel prices up to record levels.

Forsyth Barr analyst Andy Bowley said even if peace were to break out within a week, it would take three months for the jet fuel premium to return to normality.

“For these fuel flows to normalise will take time.”

There was less feedstock for the refineries to produce jet fuel, and it would take time for stocks to be replenished, he told the Herald.

“All these Asian refiners that we get our refined products from are largely sourced from the Strait of Hormuz.”

Air New Zealand earlier this month cited rising jet fuel prices when raising domestic fares by $10, short-haul international flights by $20, and long-haul by $90.

Regional airline Air Chathams earlier this month announced a $20 fuel surcharge on all flights because of increased aviation fuel prices.

Many refineries produced far more petrol and diesel than jet fuel.

The US Energy Information Administration previously said refiners could shift yields among those products in response to market conditions.

But refinery configuration, crude oil input grades, and the high costs of modifying refinery infrastructure all limited that flexibility.

And the jet fuel market was tighter than diesel, as jet fuel had fewer specialised tanks than diesel, a jet fuel trader told S&P Global this month.

The International Air Transport Association (Iata) said global average jet fuel prices rose 12.6% in the week ending March 20, hitting US$197 ($343) a barrel.

Iata said Asia and Oceania prices averaged US$204.95 ($356.60) a barrel, compared to US$179.12 ($311.66) in North America.

Brent crude shortly after midday on Friday was trading at US$108 ($187.92).

John Weekes is a business journalist covering aviation and courts. He previously covered consumer affairs, crime, politics and courts.

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