Asia-Pacific carriers continue to face pressure from elevated jet fuel prices, even though the average price of jet fuel fell to $119.13 per barrel in the week ended July 3, according to data monitored by the International Air Transport Association (IATA).
The current jet fuel price of $119.13/bbl is lower than the average price a month ago, specifically the week of June 5 when the weekly average price peaked at $146.25/bbl.
According to Wong Hong, director general of the Association of Asia Pacific Airlines (AAPA), “Airlines continue to face uncertainty stemming from geopolitical developments, trade policy shifts and broader economic headwinds. Rising inflationary pressures are also contributing to higher non-fuel operating costs, and may weigh on consumer spending and travel demand in the months ahead.”
In a June 29 press release of the AAPA, Wong Hong acknowledged, “Overall, operating conditions for carriers remain challenging. Nonetheless, Asia Pacific carriers have responded well to evolving demand patterns, and remain agile in adjusting their networks and capacity deployment to capture growth opportunities while maintaining strict cost discipline.”
He pointed out that “International passenger markets remained broadly stable in May, with firm demand on longer-haul routes. Meanwhile, air cargo demand continued to grow, supported by technology-related shipments and precautionary stockpiling activity in response to evolving supply chain and geopolitical risks.”
“For the first five months, Asia Pacific airlines carried a combined total of 166.8 million international passengers, representing a 3.9-percent increase compared to the same period in 2025. International air cargo demand grew 4.7 percent, supported by the continued need for the timely movement of goods amidst operational disruptions particularly in conflict zones,” he also said.
Looking ahead, Wong Hong said, “The recent easing of tensions in the Middle East may help to alleviate some concerns over supply chain disruptions and energy costs. While jet fuel prices have eased from recent highs, the average price of $137/bbl in the first two weeks of June continues to place pressure on airline operating costs.”
Preliminary May 2026 traffic figures released June 29 by the AAPA showed a moderation in international passenger traffic growth. Meanwhile, international air cargo markets continued to expand, supported by stockpiling activity as businesses sought to safeguard against potential supply disruptions and higher costs arising from the conflict in the Middle East.
The AAPA is the trade association for scheduled international airlines based in the Asia Pacific region. Its 18 members are Philippine Airlines, Japan Airlines, Singapore Airlines, Cathay Pacific, Eva Air, Qantas, Thai Airways, ANA, China Airlines, Malaysia Airlines, Vietnam Airlines, Royal Brunei, Garuda Indonesia, Air India, Air New Zealand, Lion Air, Bangkok Airways and Air Astana.
In May, AAPA said, the region’s carriers carried a total of 31.7 million international passengers, a 1.1-percent decline compared to the same month last year. “Demand, as measured in revenue passenger kilometers, moderated by a reduction in traffic carried by some airlines, reflecting recent adjustments to international services, while overall available seat capacity remained broadly unchanged for the month. As a result, the average international passenger load factor rose by 1.2 percentage points to 82 percent.”
The AAPA permanent secretariat is headquartered in Kuala Lumpur, Malaysia, with international representation in Brussels and Washington D.C. Collectively, the region’s airlines represent over one-third of global passenger and air cargo traffic, thus playing a leading role in the ongoing development of global aviation.
Last June 30, IATA reported that “Air passenger demand was down by 2.2 percent year-on-year in May on the impact of the war in the Middle East. The decline was centered on carriers in the Middle East with a 28.4-percent year-on-year fall. That’s a significant improvement on the 46.6-percent decline recorded for April, a sign of the region’s resilience.” Notably, IATA also saw year-on-year contractions in demand in both North America and Asia, largely related to domestic market conditions in the US and China.
“Overall, May demand still appeared to be largely resilient in the face of high fuel prices and air fares. While the recent sharp drop in oil prices is an encouraging development, the challenges created by the war will likely persist for some time. Oil supply through the Strait of Hormuz remains uncertain and it is likely to take time before the benefit of lower oil prices is reflected in ‘normalized’ jet fuel pricing. In the meantime, airlines who are operating on a two percent margin will have little choice but to continue testing demand resilience with higher fares that attempt to cover elevated fuel costs,” said Willie Walsh, IATA’s director general.
Based on the regional breakdown of international markets, IATA reported that Asia-Pacific airlines still managed to achieve a 1.3-percent year-on-year increase in demand even as capacity decreased by 1.1 percent YOY. The load factor was 85.3 percent, an increase of two percent compared to figures in May 2025.
IATA cited that in Vietnam, tighter limits on jet fuel imports led to significant capacity cuts on short haul routes, resulting in a decline in intra-Asia international traffic during the month.
However, early in the Middle East conflict, Philippine Airlines and low-cost carrier Cebu Pacific Air were among the first in the AsPac region to announce reductions to their international and domestic flights, greatly reducing capacity due to higher jet fuel costs. LCC Cebu Pacific, in fact, was greatly impacted by the higher cost of jet fuel, reporting a first quarter loss of P400 million, while PAL maintained a positive income of $78.55 million in the first quarter.