Jet Fuel Surge Pressures Vietnamese Airlines; HVN, VJC Adjust Operations

Overview

Global jet fuel prices have surged to 160-170 USD/barrel due to escalating Middle East tensions, directly impacting Vietnamese carriers Vietnam Airlines (HVN) and Vietjet Air (VJC). The Civil Aviation Authority of Vietnam reports that airlines are planning cautious capacity adjustments to mitigate cost pressures, even as Q1 2026 international passenger traffic grew 13% year-on-year.

Key Facts

• Jet A-1 fuel price at Singapore rose from 85-90 USD/barrel pre-conflict to 150-200 USD/barrel in early May 2026, stabilizing at 160-170 USD/barrel as of May 5.
• Lufthansa plans to cut approximately 20,000 short- and medium-haul flights from May to October 2026.
• Global aviation market may reduce supply by 2 million seats and over 13,000 flights in May 2026 alone.
• Vietnamese airlines carried 4.98 million international passengers in Q1 2026, up 13% year-on-year.
• Domestic passenger traffic reached 10.1 million, up 12%, while domestic cargo fell 7.4% to 56,100 tonnes.
• HVN closed at 21,150 VND (-2.08%) and VJC at 173,100 VND (-1.09%) on May 13, 2026.

What Happened

The Civil Aviation Authority of Vietnam reported to the Ministry of Construction on the impact of volatile global fuel prices on airline operations. Jet A-1 prices have more than doubled from pre-conflict levels, driven by Middle East supply disruptions and transport bottlenecks. The authority warned that if the crisis persists, some regions, particularly Europe, could face fuel inventory declines from June 2026.

In response, international carriers have raised fares and cut frequencies. Lufthansa alone expects to cancel 20,000 flights. Vietnamese carriers are now planning to adjust their schedules cautiously, prioritizing cost optimization and safety while minimizing passenger disruption. The authority noted that adjustments will be made to protect connectivity and summer travel demand.

Market Context

Both HVN (listed on HOSE) and VJC (listed on HOSE) saw declines on May 13, 2026, with HVN falling 2.08% and VJC 1.09%, reflecting market concern over rising input costs. The aviation sector had been recovering strongly in Q1 2026, with double-digit passenger growth, but fuel now accounts for a larger share of operating expenses. The broader VN-Index has been under pressure from global macro headwinds, and airline stocks are particularly sensitive to fuel price spikes.

Strategic Significance

The fuel cost shock tests the resilience of Vietnamese carriers’ business models. HVN, with its legacy fleet and higher cost base, is more exposed than low-cost carrier VJC, which has better fuel efficiency and hedging flexibility. However, both face the risk of margin compression if fuel prices remain elevated through the peak summer season. The ability to pass on costs via ticket prices will be constrained by competitive dynamics and consumer sensitivity. Long-term investors should assess each carrier’s fuel hedging policies and fleet renewal plans.

What to Watch

• Q2 2026 earnings reports from HVN and VJC, expected in August, for margin impact.
• Any official capacity reduction announcements from Vietnamese carriers in the coming weeks.
• Jet fuel price trajectory, particularly the Jet A-1 Singapore benchmark, through June 2026.
• Potential government support measures, such as fuel tax reductions or subsidies.
• Passenger load factor data for the summer season (June-August) to gauge demand resilience.