Virgin Atlantic has raised ticket prices by as much as £360, and the chief executive has warned that higher fuel prices are “here to stay” amid the ongoing conflict in the Middle East.
The airline has added a fuel surcharge of £50 to economy-class tickets, with £180 to premium economy, and £360 to business class - but has said this still doesn’t fully offset its elevated fuel costs.
Corneel Koster, who took over as Virgin Atlantic chief executive in January, told the FT that the failed peace talks between the US and Iran over the weekend "was not good news", warning travellers that flight prices would be even higher in the coming months, and possibly for the remainder of the year.
Koster said that despite the “positive news” of the ceasefire between the US and Iran, “all-in jet fuel prices” were still more than double pre-war levels.
He said: “We have never seen jet fuel at this level and airlines cannot sustain those sorts of high costs.
“If the fuel price goes much higher, I think the surcharges may go higher. If they go up in a week and you book in two weeks’ time, you’ll be paying higher.”
Fuel, typically airlines' second-largest cost after labour, accounts for about 27% of operating expenses, and prices have more than doubled since the conflict began.
Koster added that Virgin Atlantic's economy class sales are expected to be "relatively weaker" compared to business class, as the prolonged war in the Middle East has contributed to the cost of living, hitting global travel demand.
Data shows that Brits are already cutting back on holidays in the wake of the war, reducing spending on overseas trips for the first time last month since the pandemic.
Jet fuel prices have surged since Iran effectively closed the Strait of Hormuz when the conflict began, with the price of Brent crude rising above $100 a barrel again on Monday.
Around 20% of the world's oil and gas passes through the shipping route off Iran’s coast.
Virgin has not ruled out cutting routes if jet fuel prices remain high and demand slows. No major changes have yet been made to its network, beyond cancelling flights to Riyadh and ending winter-only services to Dubai.
Koster said: “We would make sure that we don’t lose unnecessary amounts of money on weaker routes and frequencies. So if there was a need to, we would adjust.”
The UK is particularly dependent on jet fuel from the Middle East, and Kuwait, which provides more than 38% of total British imports, has suffered a number of attacks on its Mina Al-Ahmadi plant, which may no longer be able to satisfy requirements even if the Strait of Hormuz were to reopen.
Airlines typically protect themselves from fluctuations in jet fuel costs by using hedging contracts to lock in prices for the future.
While Virgin was hedged on 50 to 60% of its fuel requirements through most of the year, costs from the unprotected portion were “very high”, and Koster said it was no longer possible to secure hedging contracts towards the end of the year after the failed peace talks between the US and Iran last week with the cost of jet fuel now “extremely dynamic and volatile”.
Koster said: “We have contracts with multiple suppliers who have a wide range of diversity of where the jet fuel comes from.
“We have good visibility and no concern for the coming one to two months - certainly for the remainder of April and May. Beyond that I have less visibility, but that is quite normal.”
He told Bloomberg News that Virgin are in discussions with governments and its base at London's Heathrow Airport to help ensure adequate fuel availability.
Many other airlines, including Air India to Air New Zealand, have also added jet fuel surcharges to tickets in response to the higher oil prices.
ACI Europe, which represents over 600 airports in 55 countries, has warned that hubs were about three weeks away from “systemic” jet fuel shortages if the Strait of Hormuz was not fully reopened.
Qantas has announced plans to cut 5% of its domestic flights, while Cathay Pacific and United Airlines have also reduced flights.
The European Commission has also been concerned about a lack of jet fuel supply in the near future, with spokeswoman Anna-Kaisa Itkonen saying: “There is no evidence for fuel shortages in the European Union at present, but supply issues could occur in the near future in particular for jet fuels. That remains our primary concern.”
The International Energy Agency has said in its monthly report that Europe could start seeing shortages of jet fuel by June if the region can only replace half of the fuel supplies it usually receives from the Middle East.
The report added that global jet fuel and kerosene demand averaged 7.8 million barrels per day in 2025, with Gulf exports the largest source to the global market, averaging nearly 400,000 barrels per day.
