[Alpha Biz= Paul Lee] As Korean Air prepares for its merger with Asiana Airlines, it now finds itself facing a new geopolitical challenge. Escalating tensions in the Middle East—marked by Iran's airstrike threats on the U.S. following its attacks on Israel—have raised concerns over the potential closure of the Strait of Hormuz, a critical artery in global oil supply chains.



On June 20 (local time), the August futures contract for West Texas Intermediate (WTI) crude closed at $73.84 per barrel on the New York Mercantile Exchange (NYMEX), a three-month high. Analysts at J.P. Morgan warned that should Iran move to block the Strait of Hormuz, oil prices could surge to as high as $130 per barrel.



Such a spike would directly impact Korean Air, whose jet fuel costs account for approximately 30–35% of total operating expenses. For every $1 increase in oil prices per barrel, the airline incurs an additional ₩43 billion (approximately $31 million) in costs. Korean Air consumes around 30.5 million barrels of fuel annually. The airline, which had been on a recovery trajectory following the COVID-19 pandemic, now faces renewed downward pressure on profitability.



Fuel surcharges, which are influenced by jet fuel costs, also affect ticket demand. Korean Air and other South Korean carriers have reduced international fuel surcharges for four consecutive months, with the surcharge for July reaching its lowest point in 3 years and 9 months. According to the Ministry of Land, Infrastructure and Transport, over 11.24 million passengers flew on Korea–Japan routes in the first five months of 2025—a record high.



However, with oil prices rising amid worsening geopolitical instability, experts expect fuel surcharges to increase starting in August. Since fuel surcharges are calculated based on Singapore jet fuel prices with a one-month lag, rising oil costs this month are likely to affect ticket prices next month. Such increases may deter bookings during the peak summer travel season, further complicating revenue forecasts for Korean Air.

 

 

 

[ⓒ 알파경제. 무단전재-재배포 금지]