The ongoing military conflicts in the Middle East and the resulting instability in global energy markets are leading to massive cutbacks in Asian air traffic. Cathay Pacific and its subsidiary HK Express have announced that they will significantly reduce their flight schedule from mid-May until the end of June 2026.
The background to this is an unprecedented price explosion for jet fuel, kerosene, which has more than doubled in the global market average within a very short time. Despite several increases in fuel surcharges, Hong Kong-based airlines are forced to reduce capacity to limit the financial burden. The cancellations primarily affect regional routes within Asia, but also impact connections to Australia and Africa. While passengers are to be rebooked on alternative flights, the situation for international air traffic remains highly volatile due to blockages of key oil supply routes and the uncertain geopolitical situation.
The economic impact of the Middle East crisis on flight operations
The trigger for the current crisis in the aviation sector lies in the events of February 28, 2026, when attacks on Iran sent global oil markets into turmoil. Since then, the supply of crude oil has deteriorated drastically, driving prices for refined products like jet fuel to record highs. Data from the International Air Transport Association (IATA) illustrates the speed of this development: while a barrel of kerosene cost around US$99,40 at the end of February, this price rose to approximately US$209 by the beginning of April. For airlines, whose fuel costs traditionally represent one of their largest expenses, this poses an existential challenge.
Cathay Pacific announced that it will cancel approximately two percent of its total flight schedule between May 16 and June 30, 2026. While this percentage may seem small, in operational terms it affects a large number of routes and thousands of passengers. Its low-cost subsidiary, HK Express, is taking even more drastic measures, reducing its capacity by about six percent between May 11 and June 30. Both companies emphasized in official statements that these capacity cuts are a last resort, after other economic adjustments failed to provide the desired relief.
Adjustment of fuel surcharges and operational limits
Before deciding to cancel flights, airlines attempted to pass on financial pressure to customers through ticket prices. Cathay Pacific increased fuel surcharges by 34 percent on April 1, 2026, alone, after doubling these charges two weeks earlier. HK Express also adjusted surcharges on almost all routes, exempting only flights to and from mainland China due to specific market conditions. However, the airlines acknowledged that customer willingness to pay and competitive pressures imposed limits that had now been exceeded by the sheer high price of kerosene.
The reduction in the flight schedule focuses primarily on the regional sector, where profit margins are already lower. However, long-haul routes are not immune to the crisis. Individual services to Australia, South Asia, and South Africa have already been identified and included in the adjusted flight schedule. The airlines have assured passengers that affected passengers will be rebooked onto alternative flights within 24 hours of their originally scheduled departure time to minimize disruption.
Geopolitical instability and long-term flight cancellations
In addition to price-related cuts in its core network, operations in the crisis region itself remain severely restricted. Cathay Pacific confirmed that the suspension of flights to Dubai and Riyadh will be extended until at least June 30, 2026. The security situation in the airspace over the Middle East currently makes scheduled flights to these hubs unpredictable. These regional disruptions further exacerbate the economic pressure, as key transit hubs between Europe, Asia, and Oceania are either eliminated or must be bypassed, which in turn increases fuel consumption per flight.
Hong Kong's strategic importance as an international hub is under scrutiny due to these developments. Since the city is highly dependent on connectivity, reduced flight frequencies directly impact the regional economy. Experts point out that the current crisis exposes the structural disadvantage of airlines without direct access to inexpensive energy resources. As long as the military conflict continues and the Strait of Hormuz and other logistical bottlenecks remain at risk, a return to normal flight schedules is unlikely.
Industry-wide challenges and outlook
The situation at Cathay Pacific is symptomatic of the entire global aviation industry in 2026. Many airlines are forced to reassess their hedging strategies against rising oil prices. In a period where prices increase by over 100 percent within a month, traditional hedging strategies often prove inadequate. This means that airlines must plan their capacity not according to demand, but according to the availability and affordability of fuel.
For the coming summer, this means a tightening of supply on the global market, which is likely to drive up ticket prices across the industry. The consolidation of flight schedules at Cathay Pacific and HK Express could be just the beginning of a larger wave of adjustments in the Asia-Pacific region. The stabilization of oil markets remains the crucial factor for the sector's recovery, but given the stalled political situation in the Middle East, market observers are preparing for a prolonged period of high operating costs and restricted mobility.