Japan's two biggest carriers, ANA Holdings and Japan Airlines (JAL), told investors and analysts on Thursday that the Middle East conflict has kept jet fuel prices elevated and left forward visibility uncertain. Company executives emphasized that, despite higher costs, there were no indications of imminent supply disruptions.
At ANA, Chief Executive Koji Shibata said management expects the effect of tensions in the Middle East to taper off gradually beginning in the July-September quarter, with conditions returning to a more normal level in the second half of the financial year. Shibata noted that fuel cost assumptions differ across quarters but that ANA currently has no plans to cut flights or cancel services because of fuel shortages.
ANA provided a financial estimate for the impact of higher fuel prices, saying they will raise costs by about 140 billion yen this fiscal year. The company added that a combination of hedging, passenger fares and planned cost reductions should limit the net burden to roughly 60 billion yen. Chief Financial Officer Kimihiro Nakahori said that approximately 90% of ANA's domestic fuel requirements have already been hedged.
Looking ahead, ANA said it is considering the introduction of a domestic fuel surcharge in the financial year starting April 2027 as a potential tool to help manage elevated fuel expenses.
JAL's finance chief, Yuji Saito, echoed ANA's assessment on supply, saying the company sees no problems securing jet fuel for international flights in May and that domestic operations face no supply issues. Saito provided a sensitivity estimate for fuel costs, stating that if Singapore kerosene prices average $200 a barrel and the yen trades at 160 to the dollar, JAL's fuel bill would increase by about 28 billion yen per month. He said government support, stronger revenue and fuel surcharges would help offset part of that pressure.
Saito also reported that demand remains very strong across international and domestic passenger routes, cargo operations and low-cost carriers, with bookings and fares coming in above expectations.
For reference on currency assumptions used in the companies' comments, the exchange rate cited was $1 = 160.4700 yen.
Context and operational notes
- Both carriers attribute elevated fuel costs to the Middle East conflict while noting no immediate supply disruptions.
- ANA expects a gradual easing of the fuel cost impact later in the fiscal year and is considering a domestic fuel surcharge for fiscal 2027.
- JAL provided a scenario-based monthly cost increase tied to a $200 per barrel Singapore kerosene price and a 160 yen-to-dollar exchange rate, and cited offsetting measures including government support.