Jet fuel prices have taken off again, reaching record highs in September and adding another layer of cost pressure for airlines. For New Zealand, the risks extend well beyond airline balance sheets. Our distance from major international markets makes aviation critical to both connectivity and tourism, meaning persistently higher fuel costs risk feeding through into higher airfares, reduced capacity, and ultimately fewer visitors and less tourism spending.
Spending more to fill up the plane
Jet fuel prices have surged to new heights in September, with EIA data for US Gulf Coast jet fuel showing spot prices at over US$4/gallon throughout the month so far. On a monthly average basis, September jet fuel prices are more than double prices seen a year ago, and are higher than any other month since the EIA series began in 1990.
Jet fuel prices are now 11% higher than the US$3.94/gallon monthly average in May 2026, and 6.4% higher than the US$4.12/gallon monthly average for June 2022 following the Russian invasion of Ukraine.
Higher jet fuel prices present a particularly acute challenge for New Zealand. As a remote island economy, aviation is fundamental not only for moving New Zealanders around, but also for bringing international visitors – and their spending – into the country. With few practical alternatives to flying, sustained increases in aviation fuel costs ultimately must be absorbed through lower airline margins, higher airfares, reduced capacity, or some combination of all three.
The size of the recent cost shock is substantial. IATA’s global jet fuel benchmark has recently climbed to around US$195/bbl (~NZ$344/bbl), reflecting renewed pressure across global energy markets.
Air New Zealand recently reported that its gross fuel costs for the second half of the 2026 financial year were $328m higher than its February forecast. Hedging gains reduced the additional fuel cost to $205m, with fare increases, capacity reductions, and other mitigations reducing the overall net impact to $135m. Air New Zealand's February guidance had been based on jet fuel at US$85/bbl, before its May update assumed an average of around US$145/bbl for the second half of the year. The latest IATA global benchmark of around US$195/bbl is about 34% above even that revised assumption.
Higher airfares risk weighing on tourism
These pressures come as New Zealand’s international tourism recovery has continued. There were 3.67m overseas visitor arrivals in the year to June 2026, 9% more than a year earlier. Tourism is also a major export earner: international tourism expenditure totalled $18.1b in the year to March 2025, equivalent to around 17% of New Zealand’s total exports.
Higher airfares therefore risk more than simply increasing holiday costs. They could soften international visitor demand, constrain airline capacity, and reduce tourism spending across accommodation, hospitality, retail, and attractions. For a long-haul destination like New Zealand, persistently expensive jet fuel represents a direct threat to both aviation connectivity and one of the country’s largest export sectors.
The economic impact might not be immediate. International travellers often plan and book trips months in advance, meaning much of the travel already scheduled for the coming months was purchased before the latest increase in fuel prices. Higher fuel costs are therefore more likely to affect fares and airline capacity for new bookings, with the resulting impact on visitor arrivals and spending filtering through the economy gradually over the next six months or so.
