The signing of an initial US-Iran peace deal has driven jet fuel prices down sharply from their March crisis peaks, and AirAsia X moved immediately to pass some of the relief to passengers. Speaking from Hong Kong, group CEO Bo Lingam said the airline lowered fares by 5 percent on 15 June and will review pricing weekly as fuel costs fall further. Singapore jet fuel traded at about $112 a barrel on 20 June, less than half the $242 recorded on 30 March, though still above the pre-conflict level of roughly $80. Lingam reported a surge in bookings over the weekend and said the carrier expects to restore most of the capacity it cut earlier this year by the end of August.

The fare reduction is part of a broader network overhaul forced by the fuel spike. AirAsia X suspended several routes entirely when high costs made them unviable even at full load. The direct Jakarta–Singapore service was scrapped not only because of fuel but also because of what Lingam called an “unreasonable” Changi Airport tax of S$72, which exceeded the fare itself. The Jakarta–Bangkok route, hit by weaker demand linked to geopolitical disruption, is expected to resume within months. The airline is also retiring about 12 older aircraft aged 16 to 17 years this year and will take delivery of seven fuel-efficient Airbus A321LR jets next year, with its first A220s due by end-2027.

Viewed from Chicago and London, the wider industry is unlikely to match AirAsia X’s pace in cutting ticket prices. US jet fuel spot prices stood at $2.85 a gallon on 17 June, down from $4.88 in early April, but domestic seat capacity remains tight and fares have lagged the fuel run-up. Deutsche Bank estimated US carriers recovered only about 60 cents of every extra dollar spent on fuel in the first quarter. United Airlines CEO Scott Kirby told Reuters his airline was on a path to recouping 100 percent of the fuel-cost spike through pricing by year-end, while Southwest’s chief operating officer signalled no quick return to pre-pandemic margins until fuel falls further. Jefferies calculated that each 5 percent drop in its 2027 fuel forecast could lift earnings per share by 10 to 15 percent for Delta, Southwest and United, and by as much as 50 percent for American Airlines.

Outside the United States, the pass-through to fares is expected to be uneven. Analysts at Goodbody in Dublin note that lower crude will take time to feed through to jet fuel, and unless prices retreat toward start-of-year levels, carriers are likely to keep fares firm where demand allows. In Europe, RBC sees long-haul fares easing more readily because airlines passed on higher fuel costs more successfully on those routes, while short-haul prices may prove stickier if the peace accord supports bookings. HSBC analysts point to weak pricing power among China’s big three state carriers, whereas Hong Kong’s Cathay Pacific is better placed to offset fuel costs with premium demand and cargo revenue. In the Middle East, some airlines may use promotions to win back traffic disrupted by the conflict, but fuel remains too expensive for widespread discounting, and UAE carriers could be more aggressive with government backing.

AirAsia X’s capacity restoration will be selective: loss-making routes with no demand will not return, Lingam said, even as the group presses ahead with new services to Bahrain and London scheduled for August. The airline maintained an 83 percent load factor from January to May despite the disruptions. The next factual milestone is whether the August capacity target is met and how other carriers adjust pricing if fuel continues to ease—a trajectory that remains tied to the durability of the Iran deal and stability in the Strait of Hormuz.