Caribbean Airlines' Fuel Surcharge and What AI Could Do About the Next Oil Spike

Keystone View Company, [Group of 3 Sterograph Views of Aviation, including the Wright Brothers], 1900–1929. The Metropolitan Museum of Art, public domain.

Anyone flying Caribbean Airlines on a regional or international ticket since 10 April 2026 has paid an extra US$15 to US$25 per flight segment. The airline said it would keep absorbing a large part of the fuel increase but could no longer carry all of it. A round trip pays the charge twice and a connecting itinerary pays it on every leg. Domestic flights within Trinidad and Tobago were exempt.

IATA reported that average jet fuel reached US$195.19 per barrel by the end of March 2026, up from US$99.40 a month earlier. The cause was disrupted tanker traffic through the Strait of Hormuz, which carries roughly a fifth of the world's oil and gas trade. In late June, Iran targeted US military assets in Bahrain and Kuwait, and Brent crude held its weekly gain even as technical talks between Washington and Tehran continued.

How a Gulf conflict reaches Caribbean households

A family in Kingston booking a flight to Toronto, a tour operator in Antigua pricing winter packages and a household in Bridgetown paying its electricity bill all carry part of this conflict. Small economies that import their fuel feel every oil shock immediately.

Barbados responded quickly. Its 2026-27 budget:

• absorbed 50 percent of any increase in the Fuel Clause Adjustment on electricity bills above the March 2026 rate, at a cost of roughly $7.9 million for three months;
• capped VAT on gasoline at 47 cents per litre and on diesel at 37 cents per litre until March 2027;
• cut excise taxes on both fuels;
• had the Barbados National Energy Company Limited lock in heavy fuel oil at US$92 a barrel for three months.

Each measure helps households and small firms now, and each is a direct cost to the budget. None is designed to hold up through a second or third spike in the same year.

Jamaica, Trinidad and Tobago and the Bahamas face the same pressures on airfares, import costs and tourism. Arrivals for 2026 are broadly on track so far, but no Caribbean tourism ministry has a reliable, current measure of how close higher fares are to pushing visitors towards cheaper destinations.

Why a flat surcharge is a blunt tool

A flat surcharge charges every passenger the same amount, whether they are a diaspora traveller visiting family with few alternatives or a holidaymaker comparing the Caribbean with a dozen other places. Revenue management systems at larger airlines model how sensitive demand is on each route and spread a cost increase unevenly. They recover more where bookings hold up and less where travellers would walk away. Caribbean Airlines' systems were not built to do this at the speed this shock required.

Hedging shows a similar gap. Barbados' US$92 hedge was a sound decision on the information available. Larger fuel buyers add models that track shipping disruption, tanker insurance rates, options prices and past behaviour of oil during crises, because a small finance team cannot follow that many signals by hand during a war.

Four things AI can change, and one it cannot

No model built anywhere prevents a war over a shipping lane, and none predicts oil prices reliably. What AI can change is how early a shock is seen and how it is shared out.

1. Hedging decisions. A model that tracks tanker traffic, insurance rates, options markets and past crisis behaviour helps a finance team judge whether a spike looks temporary or lasting, and size and time a hedge accordingly. People still make the call. Hedging smooths costs; it does not lower them on average.
2. Route-level pricing. Demand forecasts for each route can show how a fare rise of a given size will affect bookings, so a carrier can phase in increases and vary them by route instead of adding one flat fee overnight.
3. Fuel burn. Flight planning and load optimisation tools, standard at larger carriers, adjust altitude, routing and weight distribution to save fuel on flights already scheduled. On a fleet the size of Caribbean Airlines', small percentage savings recur on every flight.
4. Tourism demand. Models combining booking data, fare trends and source-market indicators can show tourism boards which months and markets are most exposed to a fare increase weeks before arrivals figures do, so marketing budgets can move in time.

Route-level pricing raises a fairness problem that I have not seen a Caribbean regulator address. The travellers least able to switch are often diaspora families flying home, so a model that recovers more from price-insensitive routes can load the cost onto them.

Why this is Council work

I chair the Caribbean AI Risk Management Council because most shocks that hurt this region start elsewhere: a war in the Gulf, a hurricane season shaped by a warm Atlantic, a global chip shortage. Small import-dependent islands have the least buffer to absorb them. The Council helps governments and firms build forecasting and risk models so they can price these shocks in advance instead of reaching for an emergency budget line each time.

I founded StarApple AI in 2016 on the view that the region needs its own tools for its own risks. A hedging model trained on Caribbean import patterns, or a demand forecast built around the source markets that fund Caribbean tourism, will never make headlines. It can keep a US$25 surcharge from becoming US$50 the next time tankers are held up in the Gulf.

The weak spot in all of this is data sharing. A regional model only works if airlines and fuel buyers hand over commercially sensitive booking and procurement data, and none has yet agreed to.

What to do next

1. Caribbean Airlines and other regional carriers: pilot a demand forecasting model on the three highest-volume routes using existing booking history, and test phased or route-specific fuel recovery against the flat surcharge before the winter season.
2. Barbados National Energy Company Limited and other state fuel buyers: before the current three-month hedge ends, add a model-based risk signal to the hedging review and move from quarterly to monthly reviews while the Gulf conflict continues.
3. Tourism ministries and boards: start tracking weekly bookings by source market against average airfare from that market, using data already collected, so the effect of the next fare rise is measured within weeks.
4. CARICOM energy and transport officials: commission one shared hedging and demand model for the region's smaller airlines and utilities instead of each island building its own.
5. Consumer affairs regulators: ask carriers to publish how fuel surcharges are calculated and when they will be removed, and check that route-level pricing does not fall hardest on diaspora routes.