Jet Fuel Prices Soar to Record Highs

Jet fuel prices have reached new heights, increasing by over 100% compared to last year and pushing them above any other month since 1990. The US Gulf Coast jet fuel price has surged to over $4 per gallon, with September's average price more than double the same period in 2025.

New Zealand is particularly vulnerable to these rising costs due to its remote location, making aviation a critical component of both domestic connectivity and international tourism. With few alternatives to flying, increased fuel costs must be absorbed through lower airline margins, higher airfares, reduced capacity, or some combination of all three.

Air New Zealand recently reported that its gross fuel costs for the second half of 2026 were $328m higher than forecast, with hedging gains reducing this to $205m. The company has already assumed an average jet fuel price of around $145 per barrel, but the latest IATA global benchmark is at $195 per barrel, a 34% increase.

The impact on international tourism could be significant, with higher airfares potentially softening demand and reducing visitor arrivals. International tourism expenditure accounted for around 17% of New Zealand's total exports in 2025, making it a major contributor to the country's economy.