Jet fuel prices have more than doubled since the United States and Israel first attacked Iran in February, with European spot prices rising from about €68.27 ($80) per barrel to €153.84 ($180) at the end of April, the International Air Transport Association reported.
The price surge, driven by the alternating closures of the Strait of Hormuz that handles roughly a fifth of global oil and gas tankers, is now forcing airlines to choose between cancelling flights, raising fares or both. Marina Efthymiou, an aviation management professor at Dublin City University, told German broadcaster DW that fuel typically accounts for 25% to 50% of an airline’s operating expenses. “If fuel prices remain high and airlines have not hedged, they could go bankrupt,” she said.
Some major carriers have already moved. Air France-KLM has imposed a €100 surcharge on long-haul flights, with senior vice president Sebastien Justum telling the European Parliament: “We are obliged to do so, because otherwise we just are bankrupt in a few months.” Lufthansa announced on April 22 that it would cut 20,000 short-distance flights over the next six months, and Scandinavian Airlines plans to cancel around 1,000. Average airfares are 24% higher year-on-year, according to advisory firm Teneo.
The supply outlook is tightening. Two weeks ago, the head of the International Energy Agency warned that Europe has about six weeks of jet fuel left. The bloc consumes 1.6 million barrels a day on average, sources 1.1 million domestically and used to import 500,000 barrels of refined fuel from the Middle East via Hormuz, a route now “all but impassable.”
European Commission President Ursula von der Leyen told the European Parliament that the bloc’s fossil fuel import bill has climbed by more than €27 billion in just 60 days of conflict and called for stronger coordination on jet fuel and diesel reserves. The Commission has launched its AccelerateEU plan, which includes a fuel observatory to monitor jet fuel stocks across member states.
Airlines for Europe (A4E), representing 80% of European air traffic, has urged Brussels to relax anti-tankering rules and temporarily suspend the Emissions Trading System. Airports Council International Europe described the prospect of a supply shock at regional airports as “an existential threat.”
The disruption compounds pressure on Sri Lanka’s outbound and inbound aviation links. Average airfares for Sri Lanka travellers have already risen 24% over the year, while tourist arrivals slowed sharply in April on the back of regional connectivity disruptions. The IEA earlier described the conflict as the biggest energy crisis in history, and European carriers had previously appealed for EU intervention on jet fuel supply.
Source: Newswire (via DW).
