Willie Walsh, head of the International Air Transport Association, said it could take months for jet fuel supplies to stabilize even if the Strait of Hormuz remains open, due to damage and disruption to refining capacity across the Middle East.

Airlines are facing what executives describe as their most severe operational strain in years, as Iran’s earlier closure of the key shipping route choked global jet fuel supply, pushing prices sharply higher.

Although oil prices fell below $100 a barrel following the ceasefire announcement, jet fuel costs remain elevated.Delta Air Lines said it expects lower-than-forecast second-quarter profit and plans to reduce capacity across its network to offset an estimated $2 billion increase in fuel expenses.

The carrier projects jet fuel prices at around $4.30 per gallon for the June quarter, significantly higher than a year earlier.Fuel typically accounts for about 27% of airline operating costs, making the recent surge particularly burdensome.

Industry data indicates jet fuel prices have more than doubled since the onset of the Iran conflict, outpacing increases in crude oil.Airlines globally have responded by raising fares, cutting flights, carrying additional fuel from origin airports and adding refueling stops to manage supply uncertainty.

Walsh said that while crude prices may ease, jet fuel is likely to remain relatively expensive in the near term due to refinery constraints. “Even if it reopens and stays open, it will take months to restore supply to required levels,” he said.The disruption is also affecting adjacent sectors.

TUI said it is assessing options for two cruise ships stranded in Abu Dhabi and Doha since the conflict began, noting it could take weeks to resume operations.Analysts said the ceasefire has supported airline stocks, with some describing the situation as a potential buying opportunity.

However, broader recovery in travel demand may lag, with economists pointing to a prolonged impact on consumer confidence.

According to Oxford Economics, it could take several months for traveler sentiment to normalize, even under a stable ceasefire scenario, as safety perceptions recover gradually.

The Middle East tourism sector, valued at roughly $367 billion, is also expected to face a delayed rebound, reflecting the wider economic fallout from the conflict and supply chain disruptions.

The price controls, introduced in December after widespread flight cancellations by market leader IndiGo drove up ticket prices across the sector, will be withdrawn as conditions stabilise, the civil aviation ministry said in the order dated Friday.

“The prevailing situation has since stabilised, with restoration of capacity and normalisation of operations across the sector,” the ministry said. The order has not been made public, and a ministry spokesperson did not respond to a request for comment.

The caps had been imposed following disruptions that tightened seat availability and triggered fare spikes at rival carriers. Authorities intervened to limit price volatility and protect passengers.

Indian carriers had urged the government to remove the caps, arguing they were incurring significant revenue losses amid rising expenses, particularly from higher jet fuel prices.

Analysts at HSBC have estimated that a $1 per barrel change in fuel prices can alter IndiGo’s annual fuel bill by roughly 3 billion rupees.Under the restrictions, one-way fares for routes up to 500 km were capped at 7,500 rupees, while tickets for journeys between 1,000 and 1,500 km, including the busy New Delhi–Mumbai sector, were limited to 15,000 rupees.

The government directed airlines to ensure pricing remains “reasonable, transparent and commensurate with market conditions,” adding that passenger interests should not be adversely affected as the controls are lifted.

The move signals a shift back toward market-driven pricing in India’s aviation sector as operational stability returns, even as cost pressures persist.