The price of a holiday flight is about to become a lot more painful. Jet fuel has surged to levels that one of Britain’s leading energy market experts described to MPs as “crazy” — and airlines are already moving to pass the cost on to passengers.

Dr Amrita Sen, founder of Market Intelligence at Energy Aspects, reportedly appeared before the Commons Treasury Committee to deliver a stark assessment of what the Iran crisis has done to aviation fuel markets. While the world has been watching crude oil, she said, the real shock has landed somewhere else entirely. Jet fuel has doubled or even trebled from its previous level of around $90 a barrel — a move that dwarfs what has happened to crude.

“Everyone is talking about crude oil but there are prices for jet fuel that have gone above $300 – it is crazy what is going on,” she told MPs.

“So much production is focused in the Middle East… it is not going to be possible to replace that through other sources. I am expecting quite significant rises in air fares.

“Some airlines hedge against price rises which will help a bit, but we should absolutely be expecting higher air fares for at least the next couple of months.”

Airlines move fast

The industry did not wait long to act, reported the Daily Mail. Qantas, Air New Zealand and Scandinavia’s SAS all announced fare increases on Tuesday, with more carriers expected to follow as Gulf supply disruptions bite deeper.

Hong Kong Airlines went furthest, announcing surcharges of up to 35 per cent taking effect from Thursday.

Not every airline is in the same position. IAG, the group behind British Airways, said its hedging arrangements had insulated it from the immediate pressure and it had no plans to raise prices yet. Other carriers were less reassuring, flagging that fuel surcharges were on the way.

Inflation threat

Beyond the airport, the crisis is threatening to push UK inflation significantly off course. The Office for Budget Responsibility put a number on the risk — if oil holds at current levels, UK inflation could land a full percentage point above target, at three per cent rather than two.

Professor David Miles, sitting on the OBR’s budget responsibility committee, told the same Treasury committee that the ripple effects on British prices could be “significant” and “completely unwelcome.” The numbers he cited told their own story: oil is running around 20 per cent above where it stood before the conflict began, and gas has climbed by roughly half.

Most household energy bills are cushioned for now — the official price cap holds until the end of June. But with no sign of prices easing, ministers are quietly working on contingency plans for a support package to cushion the blow if the situation has not improved by summer.