Cathay Cargo is evaluating alternative mid-point airports on Asia-Europe routes after suspending Dubai and Riyadh services, causing payload constraints on direct flights. Jet fuel prices surged 104% month-on-month to $197/barrel (IATA, week ending 20 March), prompting fuel surcharge hikes. With only ~30% of crude oil costs hedged in 2026—and no hedge on refinery margins—Cathay faces acute cost pressure. The carrier reaffirmed its commitment to sustaining capacity at Hong Kong, the world’s busiest cargo airport, amid Middle East volatility and record fuel costs.
According to www.aircargonews.net, Cathay Cargo is actively seeking alternative mid-point airports on Asia-Europe freight routes to offset payload limitations caused by the suspension of Middle East services — particularly Dubai and Riyadh — and the resulting shift to direct flights.
Capacity Adjustments Drive Route Reconfiguration
Cathay Cargo has cancelled all passenger operations to Dubai and Riyadh through the end of May and suspended freighter services to both cities indefinitely. Previously, five of its eight Asia-Europe freighter services routed via Dubai; now those flights operate directly but face payload limitations. As a result, Dominic Perret, Cathay Cargo director of cargo, confirmed the carrier is “currently reviewing alternative mid-points with the aim of removing this restriction”.
Jet Fuel Crisis Triggers Surcharges and Hedging Gaps
The airline cites an unprecedented surge in jet fuel prices as a second major pressure point. Perret referenced IATA data showing the global average jet fuel price rose to $197 per barrel for the week ending 20 March — up from $95.95 per barrel for the week ending 20 February — representing a 104% increase in one month. He explained that jet fuel pricing comprises both crude oil and refinery components, both of which have increased significantly. Fuel accounted for approximately 30% of Cathay Pacific’s total operating costs in 2025. While the airline practices fuel hedging, Perret noted that in 2026, hedging covers only around 30% of the crude oil component and does not apply to the refinery component, rendering current risk-mitigation measures insufficient.
“Like many airlines, Cathay undertakes fuel hedging to manage price volatility. However, in 2026, our hedging covers only around 30% of the crude oil component and does not apply to the refinery component, making this measure insufficient given the scale of the recent surge in the price of jet fuel.” — Dominic Perret, Director of Cargo, Cathay Cargo
In response, Cathay Cargo has implemented fuel surcharge increases across its network. Perret emphasized the carrier’s commitment to maintaining capacity: “Cathay Cargo is determined to maintain our capacity as far as is practicable despite the escalating jet fuel price.” He underscored the strategic importance of Hong Kong International Airport — described as “the world’s busiest cargo airport” — to global supply chains.
Market Context and Operational Resilience
Perret reported a positive start to 2024 despite the extended Lunar New Year holiday, which softened demand in Hong Kong and mainland China during February. However, since late February, events in the Middle East and the unprecedented surge in aviation fuel prices have introduced significant market volatility. This aligns with broader industry trends: multiple carriers including Lufthansa Cargo and Turkish Airlines have recently announced route adjustments or capacity reductions on Asia-Europe corridors due to Middle East geopolitical risks and fuel cost pressures. According to IATA’s March 2024 Air Cargo Market Analysis, air cargo yields rose 18.3% year-on-year in February — the highest since November 2022 — driven largely by constrained capacity and rising operating costs.
For supply chain professionals, these developments signal three immediate implications: first, continued volatility in Asia-Europe air freight lead times and space availability, especially for time-sensitive goods requiring transshipment flexibility; second, heightened exposure to fuel surcharge fluctuations, necessitating tighter contract clause review (e.g., FSC pass-through mechanisms and indexation frequency); and third, growing operational value in identifying and qualifying secondary hubs — such as Istanbul, Astana, or Baku — capable of supporting efficient mid-point handling without compromising customs transit efficiency or cold chain integrity.
Source: Air Cargo News
Compiled from international media by the SCI.AI editorial team.
