Vietnam’s Aviation Sector Braces for Fuel Costs and Supply Disruptions Amid Middle East Conflict

Hanoi – Vietnam’s aviation industry is facing significant headwinds as the ongoing conflict in the Middle East drives up jet fuel prices and creates potential supply shortages. While Vietnamese carriers do not operate direct flights to the region, the disruption to global crude oil supplies is impacting routes to Europe and increasing operational costs for domestic airlines.

Rising Fuel Costs and Operational Impacts

The price of Jet A-1 fuel, a key component of aviation operations, has surged in recent months. According to the Civil Aviation Authority of Vietnam (CAAV), the price traded in Singapore rose from $83.32 and $89.04 per barrel in January and February 2026 to $231.42 as of March 4, representing a 160% increase in just four trading days. As of March 9, 2026, the price had stabilized around $160.57 per barrel but remains elevated and is expected to continue rising due to ongoing tensions and supply concerns.

This price increase is expected to increase airline operating costs by 50 to 60 percent, and potentially over 70 percent if prices exceed $200 per barrel, according to the International Air Transport Association (IATA). Vietnam Airlines is projected to see operating costs increase by 50-60% monthly, while Son Phu Quoc Airlines anticipates a 30% rise, and VietJet Air faces an additional VND 2 trillion per month in expenses.

Airlines are too being forced to reroute flights to avoid airspace over Iran, Iraq, and surrounding areas, adding 10-15 minutes to each flight and increasing costs by roughly $2,000 per trip due to higher fuel consumption and navigation fees. These detours involve either a northern corridor via Central Asia or China, or a southern corridor through South Asia and the Arabian Peninsula.

Fuel Supply Concerns

Vietnam relies on imports for 70% of its aviation fuel needs, making it particularly vulnerable to disruptions in the global crude oil supply. Disruptions in crude oil supply through the Strait of Hormuz are directly impacting Jet A-1 supplies in Asia. While current suppliers, including Skypek and Petrolimex Aviation, are fulfilling contracts through March 31, 2026, there are concerns about potential delays or cancellations of future deliveries from suppliers in Singapore, Thailand, and China. This could lead to fuel shortages for Vietnamese airlines as early as April 2026.

Domestic refineries, Nghi Son and Dong Cuat, are expected to undergo regular maintenance in March and April 2026, with operations temporarily suspended for 10 days each month, further limiting domestic production capacity.

Government Intervention and Mitigation Strategies

The Vietnamese government is taking steps to mitigate the impact of the crisis. The CAAV has recommended several measures, including:

• Reducing aviation-related fees (takeoff, landing, and air traffic control) by 50%, mirroring reductions implemented during the COVID-19 pandemic.
• Proposing a plan to adjust the price cap on domestic flights.
• Seeking exemption from the environmental protection tax on aviation fuel through the end of May 2026 and reducing the value-added tax rate.
• Reviewing and amending preferential import and export tariff rates for petroleum products and raw materials.
• Allowing aviation fuel surcharges on domestic tickets with flexible adjustments based on fuel prices.
• Seeking financial support from the State Bank of Vietnam, including increased credit limits and letter of credit guarantees, to ensure a stable fuel supply.

The Ministry of Industry and Trade is also directing domestic refineries to maximize Jet A-1 production.

Impact on Middle Eastern Carriers

Middle Eastern carriers serving Vietnam – Qatar Airways, Emirates, and Etihad Airways – have also been affected, with numerous flights canceled since February 28, 2026, impacting tens of thousands of travelers. These airlines operate six routes connecting Abu Dhabi, Dubai, and Doha with Hanoi, Ho Chi Minh City, and Danang, with a combined frequency of approximately 12 flights per day. In January 2026, they transported around 141,000 passengers and 11,000 tons of cargo to and from Vietnam.

The Vietnam Air Traffic Management Corporation could lose nearly $250,000 per week, or roughly $1 million per month, in revenue due to the conflict, while the Airports Corporation of Vietnam estimates potential losses of around $10.9 million per month from aviation service fees.