Europe’s biggest airlines say fuel price spike caused by Iran war will drive up fares | Airline industry
Europe’s largest airlines advise passengers to make early reservations, saying that the increase in fuel prices due to the war in the Middle East will increase flight fees.
While carriers have partially hedged jet fuel prices, bosses have said they cannot avoid passing on additional costs to passengers for long.
Long-haul airlines such as Air France-KLM and Lufthansa said they would add more flights via Asia, where Gulf carriers’ hubs have been closed or operating at a reduced level since the US-Israeli attack on Iran.
EasyJet has dismissed fears of possible fuel shortages that would affect flights in Europe, despite concerns about supplies in parts of Asia, and Vietnamese airlines have warned they may reduce their schedules this week.
Kenton Jarvis, the airline’s general manager, said they “didn’t see any problems” with their fuel supply. But he said travelers should book as early as possible as risks to prices begin to ease, leading to higher ticket prices.
Ryanair’s Michael O’Leary likewise downplayed any immediate changes but said it would become a problem for airlines if fuel price increases “continue for six months”.
The price of kerosene was already up 94% on the annual average at the end of last week, according to Iata’s jet fuel monitor, and the price of crude oil rose sharply again on Thursday following escalating hostilities.
The administrators are IAG, which owns BA; Air-France-KLM; and Lufthansa.
There were indications that there could also be positive developments in the crisis for Europe’s long-haul carriers if they manage to reassert their global role after giving way to airlines and airport hubs in the Gulf.
Lufthansa said it was adding 40 flights to Asia to offset disruption in the Gulf. Air France-KLM said it was also increasing capacity to Asia and regaining some market share, driven by “very healthy” demand on routes to Asia and Africa.
BA this week announced direct flights to Melbourne, Australia, and expanded services from London Heathrow via Kuala Lumpur in Malaysia. It said it would add more service to destinations that avoid flying in congested and degraded Middle Eastern airspace, such as the Caribbean.
A4E bosses issued a joint statement calling on Europe’s leaders to support the sector by cutting green taxes, saying they were “losing competitive ground to non-EU airlines, destinations and hubs that do not face similar regulatory obligations”.
It will be a choice between “increased connectivity or disruption to routes,” they said, adding: “Large-scale airspace closures in the Middle East are a reminder of our resilience and how important EU airlines and hubs are for connectivity with the rest of the world.”
Airlines have called on the EU to amend its upcoming mandates for greener fuel to include a blend of at least 6% sustainable aviation fuel by 2030; this includes 0.7% eSAF (a synthetic fuel derived from renewable energy rather than the current feedstock that uses primarily cooking oil).
Jarvis said: “We are calling for the eSAF mandate to be delayed until eSAF is actually available.”
However, EU transport commissioner Apostolos Tzitzikostas stated that it was unlikely that the call would be taken into account immediately, and told Reuters that investing in fuels was up to the industry.
