Scoot Navigates Fuel Cost Surge with Hedging Shield and Cautious Optimism on Thailand Growth

 

 

Singapore's low-cost carrier reveals fuel hedging strategy and fares adjustment as jet fuel crisis tests airline industry resilience worldwide.

 

 

At a media briefing in Bangkok on Friday, Scoot's Vice President for Pricing, Ancillaries and Sales, Lee Yong Sin, outlined the carrier's strategy for managing soaring jet fuel costs — a challenge that has rattled the global aviation industry since the outbreak of the US–Iran conflict in early 2026 drove fuel prices to near-record highs.

 

The Singapore Airlines low-cost subsidiary has deployed a combination of fuel hedging, selective fare increases and commercial capacity discipline to absorb what Lee described as a fuel cost burden that has "more than doubled" since the start of the conflict. 

 

Yet despite the turbulence, Scoot recorded double-digit passenger growth on its Thailand routes and said demand into and out of the Kingdom remains resilient.

 

 

 

 

Hedging as the First Line of Defence

Fuel hedging — the practice of locking in future prices through financial contracts — sits at the heart of Scoot's response to the current crisis. 

 

As part of the broader Singapore Airlines Group, the carrier has hedged slightly over 40% of its fuel requirements for the January-to-March period and the subsequent April-to-June quarter.

 

"We have done some hedging as part of the Singapore Airlines Group," Lee told journalists. "At least our fuel cost is hedged for a portion. We will need to monitor what will happen after the hedging period — potentially beyond June."
 

 

This places Scoot in a more protected position than many of its peers. The geopolitical shock of the US–Iran war has exposed stark divides in how airlines manage fuel risk. 

 

 

 

 

 

Since the onset of the conflict, jet fuel prices have doubled, far exceeding the roughly one-third rise in crude oil prices — a widening gap between crude oil and refined jet fuel that has created intense pressure on airline margins, forcing carriers across the world to respond with fare increases, fuel surcharges and capacity cuts.

 

According to the Financial Times, European airlines have, on average, hedged around 80% of their fuel requirements for 2026. Among notable examples, Air France-KLM increased its total hedging exposure over one year to 87%, while Qantas reported 81% of its fuel hedged for the second half of its financial year ending June 2026.

 

By contrast, the US carriers present a cautionary tale. Several major airlines in the US and China have no hedging contracts at all, leaving them fully exposed to oil price surges.

 

As of 2025, none of the four largest US carriers maintain active financial hedging programmes, having collectively abandoned the practice in recent years. United Airlines management had previously warned that a sustained fuel spike could add $4.6 billion to their annual fuel bill.

 

Even well-hedged carriers face limits. Cathay Pacific's chief financial officer acknowledged that while the airline hedges crude oil, those contracts cannot fully offset the spike in jet fuel costs — because most hedging programmes are tied to crude oil benchmarks rather than the refined fuel airlines actually consume.

 

Lufthansa, currently hedged at 82% for the current quarter and 77% for the rest of 2026, has halted all new fuel hedging activities for the time being, reflecting widespread uncertainty about where prices are headed.
 

 

 

 

 

 

Fare Increases Inevitable, but Insufficient

With hedges providing only partial protection, Scoot has also raised fares across its network. Lee was candid about the limitations of that lever. 

 

"We have increased our fares across the board, but the increase in air price is not able to defray the total cost of the increase in our fuel," he said. "It can only help defray part of our cost."

 

He declined to specify a uniform percentage increase, noting that ticket pricing is dynamic and dictated by demand, route load factors and booking windows. 

 

"It depends on when you buy, the departure date, the booking class — it's very dynamic in nature," he said.
 

 

This approach mirrors industry-wide practices. When jet fuel prices surged in 2026, airlines were forced to either raise fares, impose fuel surcharges, or reduce routes. 

 

Budget carrier Wizz Air, for instance, could see its operating profit fall by as much as 31% this year if jet fuel prices rise another 10%, according to estimates from analysts at JPMorgan.

 

Scoot has so far avoided blanket capacity reductions, though Lee was unequivocal that commercial decisions on route profitability are reviewed continuously — regardless of geopolitical circumstances. 

 

"Even without the fuel crisis, our commercial department always looks at which routes are profitable and which are not," he said.
 

 

 

 

 

 

One Route Suspended; Broader Network Held Firm

The one direct casualty has been Scoot's Singapore–Jeddah service, its sole flight to the Middle East, which has been suspended through to 16th April. 

 

"Safety of our passengers is our utmost priority," Lee said, adding that passengers on cancelled flights are offered full refunds or free rebooking at no extra cost — a policy he positioned as a differentiating commitment in the budget carrier segment.

 

Beyond the Middle East, Scoot's route network — concentrated in Southeast Asia, China, India and Australia — has been largely insulated from the immediate operational disruption. 

 

"We are still quite cautiously optimistic about demand," Lee said.
 

 

 

 

Thailand Growth Defies Headwinds

Against this challenging backdrop, Scoot reported encouraging performance on its Thai routes.

 

For the eleven months from April 2025 to February 2026, outbound Thai passenger numbers on Scoot grew approximately 10% year on year, while inbound visitors to Thailand — predominantly from Singapore, Southeast Asia and Australia — rose around 15%.

 

Scoot currently operates to seven Thai destinations: Bangkok, Phuket, Chiang Mai, Koh Samui, Krabi, Hat Yai and Chiang Rai, which launched in January 2026. 

 

The carrier runs more than 120 weekly frequencies across these routes and claims to be the only foreign carrier serving Chiang Mai, Chiang Rai, Krabi and Hat Yai with a direct connection to Singapore.

 

The Chiang Rai launch is emblematic of Scoot's fleet strategy. The carrier operates three aircraft types — the Boeing 787 Dreamliner for long-haul routes, the Airbus A320 family for medium-haul, and the Embraer E190-E2 for thinner regional routes. 

 

The 103-seat E190-E2, which Scoot received its first delivery of in April 2024, makes it commercially viable to serve lower-demand destinations that larger aircraft could not profitably serve.

 

"If we did not have the E190-E2, we would not have been able to launch Chiang Rai," Lee said.
 

 

 

 

 

 

Cautious Optimism, Vigilant Monitoring

Lee acknowledged the difficulty of forecasting growth in the current environment. 

 

"If it were not for the uncertain situation, growth would have been stronger," he said. 
 

 

He added that Scoot is running multiple scenario plans and keeping a close watch on whether fuel prices remain elevated beyond the current hedging period.

 

Asked about the broader travel outlook, Lee expressed confidence in the medium-term trajectory of Asia-Pacific aviation despite the near-term turbulence. 

 

He pointed to sustained strong load factors — consistently in the high 80s to low 90s on Thai routes — as evidence that Scoot's proposition continues to resonate with price-sensitive and quality-conscious travellers alike.

 

For now, the airline's watchwords appear to be hedging, flexibility and patience — as much in its financial strategy as in its management of an exceptionally volatile market.