The global aviation industry faces one of its greatest economic challenges since the pandemic in March 2026. Within just nine trading days after February 28, the cost structure for airlines and business aviation has radically changed. Triggered by the escalating conflict in the Middle East and the resulting uncertainty over supply routes through the Strait of Hormuz, the price of Brent crude oil and refinery margins for kerosene – the so-called crack spread – have skyrocketed to unprecedented levels.
While the price of oil briefly touched the $119 per barrel mark, the crack spread climbed to five times its historical norm. This development is hitting an industry that counts kerosene as its largest or second-largest variable cost component with full force. Experts like strategy consultant René Armas Maes warn of a permanent revaluation of the sector. Despite initial signs of a slight easing in refinery margins over the last two trading days, the price level for Jet A-1, at around $174 per barrel, remains almost twice as high as before the crisis. Airlines worldwide are already reacting with capacity adjustments and price increases, while business aviation is manually searching for ways to mitigate margin erosion through fuel surcharges.
Nine days that changed the market: Record volatility
As recently as February 2026, the oil market exhibited a deceptive stability. For almost six months, Brent crude oil traded within a moderate range around $65, and the crack spread for kerosene, at approximately $21 to $22, was only slightly above the long-term average of $20. This predictability ended abruptly at the end of February. By March 9, the closing price for Brent had risen to $98,96 – an increase of 37 percent compared to pre-conflict levels.
Particularly alarming for analysts is the extreme intraday volatility. On March 9, the price fluctuated by more than $20 within a single trading session. The difference between the day's high of $119,50 and the closing price thus exceeded the entire trading range of the preceding six months. A market that swings so wildly has lost all sense of fair value. For airlines' budget planning, this means a transition from managing calculable risks to operating in a permanent crisis mode.
Regional Divergence: Why Europe and Asia are suffering particularly badly
The effects of the crisis are geographically very unevenly distributed, primarily due to dependence on crude oil flows from the Middle East. Regions lacking direct pipeline connections or alternative sea routes outside the Strait of Hormuz experienced the steepest price increases.
Asia and Oceania, which account for approximately 22 percent of global kerosene demand, experienced an absolute peak on March 4th with a crack spread exceeding US$143 (7,2 times the normal level). The dependence on imports is most acutely felt in this region. In Europe, however, the crisis is proving particularly persistent. European refineries are not only struggling with geographical disadvantages but also with regulatory cost factors that further burden operating expenses.
In stark contrast are the Americas. North America, which represents 39 percent of the global index, benefits from self-sufficient domestic supply chains and a large geographical distance from the epicenter of the crisis. Here, the crack spread on March 9 was only three times the norm. This regional discrepancy means that US airlines currently enjoy a significant competitive advantage over their European and Asian rivals.
Strategic implications for commercial aviation
For major airlines, fuel accounts for between 30 and 38 percent of total operating costs. With fuel costs nearly doubling overnight, drastic measures are unavoidable. Since many airlines were insufficiently hedged against rising prices due to the previously low price levels, the market shock has an immediate impact on their balance sheets.
The industry is reacting tactically and structurally. Immediate measures include increasing fuel surcharges and selectively adjusting ticket prices. Routes with high demand and little competition are being made more expensive. Less profitable routes, particularly in the leisure segment, are at risk of being canceled altogether, as the risk of a drop in demand from price-sensitive customers is too high. Structurally, many carriers are now accelerating the retirement of older, fuel-intensive aircraft and increasingly relying on sale-and-leaseback transactions to generate short-term liquidity.
Challenges for business aviation
In business aviation, fuel costs account for 35 to 45 percent of operating expenses, even higher than in scheduled air travel. The basis for calculating charter rates, which are often fixed weeks in advance, has been rendered obsolete by the events since February 28th. Many offers issued before the crisis are now unprofitable solely due to the increased cost of kerosene.
The light and medium jet segment is particularly vulnerable. While customers of ultra-long-haul jets are less price-sensitive, charter customers in the medium segment often switch to competitors or cancel their trips when faced with sudden price increases. Operators are trying to counteract this by drastically shortening the validity period of offers and optimizing flight profiles to minimize fuel consumption. Nevertheless, the situation remains precarious for owners who charter their aircraft to cover costs: the increased costs are almost completely consuming their gross margins.
A glimmer of hope? Margin compression
Despite the overall bleak situation, there is a technical signal that gives cause for cautious optimism. On the last two trading days (March 6th and 9th), the crack spread has decreased, even though the price of crude oil continued to rise. From its peak on March 5th (4,9 times the norm), the spread has fallen back to 3,7 times the norm.
Analysts interpret this as a sign that the physical supply of kerosene via alternative channels outside the Strait of Hormuz is slowly taking hold. Should this trend of margin compression continue, fuel prices for airlines could fall, even if crude oil remains expensive. This would represent an initial easing of the supply-side pressure. Nevertheless, March 9th marks a turning point: A market fluctuation of $20 in a single day is the most precise evidence that the era of cheap energy for aviation has come to an end, at least for now. Whether this is a temporary shock or a permanently higher price plateau will define the industry's strategic direction in the coming years.