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A person walks past an unpainted Boeing 737-8 MAX parked at Renton Municipal Airport adjacent to Boeing's factory in Renton, Washington on January 25, 2024. Alaska Airlines said Thursday it expects a $150 million hit from the Boeing 737 MAX grounding, which will limit its capacity growth in 2024. The airline, which executed an emergency landing on a MAX on January 5 following the mid-flight blowout of a panel on the jet, disclosed the estimates in a securities filing, saying capacity growth will be "at or below the lower end" of its prior estimate.

Airline shares fell sharply on Monday while ticket prices climbed fast, as rising tensions in the Middle East pushed oil prices higher and shook the global travel market.

The conflict involving the United States, Israel, and Iran has already begun to affect airlines, travelers, and investors.

Oil prices jumped about 15%, rising above $105 a barrel. This level has not been seen since 2022. At one point, Brent crude futures surged as much as 29%, Reuters reported.

The spike came after some major oil producers cut supply, while fears of long shipping disruptions spread through the market.

The rise in fuel prices is hitting airlines hard. Jet fuel prices have doubled since the conflict began.

Airlines are also facing tight airspace as pilots reroute flights to avoid the Middle East. At the same time, many travelers are rushing to leave the region, leaving thousands stranded and putting extra pressure on flights.

Analysts warn that if the situation continues, airlines could face serious problems.

"Absent near-term relief, airlines around the world could be forced to ground thousands of aircraft while some of the industry's financially weakest carriers could halt operations," Deutsche analysts said in a note to clients.

Stock markets quickly reacted. In Asia, airline shares dropped sharply. Korean Air Lines fell 8.6%, making it one of the hardest hit carriers. Air New Zealand slid 7.8%, while Hong Kong's Cathay Pacific lost about 5%.

Airline Shares Tumble While Ticket Prices Jump

European airline stocks also moved lower during morning trading. Air France-KLM, British Airways owner IAG, Wizz Air, and Lufthansa all dropped between 2.5% and 6%.

US airline companies were not spared. By afternoon trading, shares of major carriers had fallen between 1% and 5%. JetBlue Airways dropped 5.35%, while American Airlines declined 3.44%.

Passengers are already feeling the impact through steep airfare increases. Data from Google Flights shows that a direct flight from Seoul to London on March 11 with Korean Air Lines jumped to $4,359.

According to US News, just seven days earlier, the same ticket cost about $564. Another route from Los Angeles to Lima on LATAM Airlines rose to $2,125, compared with $499 during the same period.

Experts say these rising costs could discourage people from traveling.

"The issue for the airlines now is that travel demand may be curtailed as costs become prohibitive for leisure travellers and as some companies start to limit business travel due to the uncertain outlook," said Lorraine Tan, director of equity research for Asia at Morningstar.

She added that high fares could weigh on travel demand through much of 2026.

Fuel is the second-largest cost for airlines after labor, usually making up about 20% to 25% of operating expenses.

Originally published on vcpost.com