On the eve of the tourism high season, airlines worldwide are raising prices and have begun cancelling flights because the oil crisis linked to the Iran War is driving up fuel costs and disrupting supply.

Last night, Iran and the US agreed a two-week ceasefire and to start talks in Pakistan on Friday. But it is still unclear how the conflict will affect Bermuda’s airlift.

Before last night’s announcement, United Airlines chief executive Scott Kirby had already told his employees the airline was preparing for oil to stay above $100 a barrel through 2027 and was pruning some of its flights in the near term.

The price of Brent crude was hovering around $110.73 per barrel yesterday, down slightly from last month’s peak of $119.50 before the ceasefire was announced. Oil prices dropped below $100 in response to the news.

Industry sources have told the BBC that rising ticket fares and flight cancellations are likely to continue.

Immediately affected were Asia and West Coast routes. But Mr Kirby was quoted by CNBC as saying: “Nothing changes about our longer-term plans for aircraft deliveries or total capacity for 2027 and beyond, but there’s no point in burning cash in the near term on flying that just can’t absorb these fuel costs.”

Skyport has not received any indication that airlines are modifying their schedules due to fuel‑market conditions, a spokeswoman told The Royal Gazette.

“All changes implemented so far align with routine, pre‑planned seasonal adjustments,” she said.

Since the US and Israel attacked Iran on February 28, the price of jet fuel in the US has nearly doubled, going from $2.50 a gallon on February 27 to $4.88 a gallon on April 2, with the increases even sharper in other regions, CNBC has reported.

BermudAir prices appear to be stable after recently introducing a new tiered fare structure. While base prices are higher, they include more “extras” to compete on value during the fuel crisis, it was observed.

As of this month, British Airways has delayed a surcharge probably until June, although total fares are already 5 per cent to 10 per cent higher through a base fare adjustment.

United fares are up 20 per cent. Mr Kirby warns that fuel spikes could lead to that being a permanent. The carrier is also increasing baggage fees by $5 to $9 to offset costs.

American Airlines is trying to offset a $400 million first quarter fuel cost increase through higher ticket revenue rather than a fixed surcharge. The total fare is rising 10 to 15 per cent.

Total spend on Jet Blue will rise some 12 per cent and the carrier will primarily use baggage fee hikes (up to $49 for a first bag during peak April travel) to recover fuel costs.

Airlines face other fears that the spike in fuel costs and other public stresses will dampen consumer spending.

Joseph Rohlena, senior director at Fitch Ratings, who covers US airlines, stated: “We’re watching the airlines very closely right now. This doesn’t have to go on too terribly long at these [fuel price] levels before you start to see potential for ratings pressures.”

The effective closure of the Strait of Hormuz is choking off supplies of both crude and refined products like jet fuel, further driving up the price.

There is pressure in some quarters on rates, fees and a move to cut flights, especially non-US domestic flights. The pinch is already being felt by some smaller carriers in parts of the world, concerned that the rising cost of oil would drive up jet fuel prices and overwhelm revenues.

Business Insurance is reporting that Vietnam Airlines suspended several domestic routes in recent days, while carriers including Scandinavian Airlines and Air New Zealand are each cutting more than 1,000 flights by May.

And the industry publication quotes Daily Express US as reporting that airlines across the world have announced they are considering cancelling flights and reducing routes as the oil crisis continues.

The Express quotes a recent staff memo from United’s Mr Kirby that the company would cut flights throughout the year, cancelling off-peak and red-eye flights.

He was quoted: “In the short term, that means tactically pruning flying that’s temporarily unprofitable in the face of high oil prices.

“If prices stayed at this level, it would mean an extra $11 billion in annual expense just for jet fuel. For perspective, in United’s best year ever, we made less than $5 billion.”

Ryanair CEO Michael O’Leary said the airline is also considering cancelling flights due to the ongoing conflict.

“We don’t expect any disruption until early May, but if the war continues, we do run the risk of supply disruptions in Europe in May and June,” he said during an interview with Sky News.