The jet fuel crisis triggered by the Iran war has hit airlines harder than the Covid-19 pandemic, according to AirAsia chief executive Tony Fernandes. Jet fuel prices surged from about $85 per barrel in late February to more than $200 within days, catching carriers off guard. US low-cost carriers have been particularly vulnerable, with Spirit Airlines becoming the first major American corporate casualty of the conflict this week.

Spirit's lawyers said higher jet fuel costs left the carrier with "no remaining way out" of bankruptcy. Fernandes expects more US carrier mergers as the pain spreads. Yet Asian airlines are weathering the storm better because geopolitics is pushing more travelers to stay within the region rather than venture to Europe, where Gulf capacity has been reduced and prices have spiked.

AirAsia is pushing ahead with a massive $19bn Airbus order for 150 A220-300 jets—the largest deal for the Canadian-made aircraft. The airline launched a Bahrain hub in February, just weeks before the conflict erupted, and has sold 50,000 tickets for Kuala Lumpur to London flights via Bahrain starting in June. While no longer actively promoting those routes, Fernandes says the hub remains central to the carrier's long-term expansion strategy.