Jet fuel prices have more than doubled since the US and Israel first attacked Iran in February. The reason: Both Iran and the US have at different points blocked the Strait of Hormuz, a major waterway for a fifth of the world’s oil and gas tankers.
Marina Efthimiou, an aviation management professor at Dublin City University, told DW that jet fuel prices in Europe rose from about €68.27 ($80) a barrel in February to €153.84 ($180) at the end of April. International Air Transport Association.
“If fuel prices, which represent 25% to 50% of an airline’s total operating expenses, remain high and airlines do not hedge, they could go bankrupt,” he said.
Apart from rising prices, there is also a possibility of a shortage of jet fuel soon. Two weeks ago the head of the International Energy Agency warned that Europe had about six weeks of jet fuel left.
Europe consumes an average of 1.6 million barrels of jet fuel per day, and purchases 1.1 million barrels from domestic sources. A large part of the remainder – 500,000 barrels – came from the Middle East through the Strait of Hormuz, which is now completely impassable.
Air travel expensive, airlines reduce flights, add surcharge
Some airlines are passing this price increase on to customers. Air France-KLM has reportedly imposed a €100 surcharge on long-haul flights, while Lufthansa announced on 22 April that it would cut 20,000 short-haul flights over the next six months. Scandinavian Airlines wants to cancel about 1,000.
“We are obliged to do this, because otherwise we will go bankrupt in a few months,” Sébastien Justum, senior vice president of Air France-KLM, said at a recent event in the European Parliament.
According to one, air fares have increased by 24% in a year Teneo’s recent reportA consulting firm.
Andrew Charlton, managing director of an aviation advocacy consultancy, said fuel supplies are adequate at the moment, but there is a lot of uncertainty about the future.
“That uncertainty, and the added cost of keeping the tank full, is making tickets more expensive,” he told DW. “Travellers should expect fewer seats and fewer bargains in the market.”
What does the airline industry expect?
Airlines for Europe (A4E), is a consortium of 16 European airlines that claims to represent 80% of European air traffic. Called on the EU to take immediate action Limiting the impact of the Iranian war.
A4E has asked the EU to relax obligations under anti-tanking law, which require flights to load 90% of the required fuel within the bloc. Such laws are intended to discourage airlines from loading cheaper fuel into countries with lower environmental standards.
It has also called on the EU to temporarily suspend the bloc’s emissions trading system, which forces airlines operating in the EU to pay for carbon emissions.
“These are temporary measures to deal with the current situation, as well as a more long-term plan to prepare for the future,” Orania Georgeoutsakou, managing director of A4E, said in a statement.
Airports Council International (ACI), which bills itself as the voice of the world’s airports. Imports from alternative sources, joint purchasing by EU member states and greater coordination have been called for.
“The current level of jet fuel prices and the potential for a new cost of living crisis mean that many regional airports on our continent could face both supply and demand shocks,” ACI Europe director general Olivier Jankovec said in a statement on April 28. “For them, this is nothing less than an existential threat.”
However, Jankovec also said airports in Europe were still not dealing with a fuel shortage.
European Commission stresses importance of inter-bloc coordination
“In just 60 days of conflict, our bill for fossil fuel imports has increased by more than €27 billion,” European Commission President Ursula von der Leyen said in an address to members of the European Parliament on Wednesday.
She emphasizes the importance of increased coordination between EU member states.
“We propose stronger coordination, not only in filling national gas storage, but also when it comes to fuel reserves – especially jet fuel and diesel, where markets are tightening,” von der Leyen said.
Last week, the European Commission launched its AccelerateEU The plan includes monitoring jet fuel stocks and coordinating supplies to airlines and airports across the bloc.
Aviation Advocacy’s Charlton said an EU-wide fuel observatory to map the available supply of jet fuel and optimize distribution is “underway” and “commendable”.
Others said EU monitoring and coordination could mitigate the impact of a potential supply crisis, but may not prove a sufficient measure if the crisis drags on.
“It may prevent a national shortage from becoming a continent-wide panic, but it can’t create fuel that isn’t there,” said Efthimiou of Dublin City University.
Jet fuel exporters are starting to hold more of their own supplies
Exporters of refined jet fuel are also realizing they have a rare commodity.
“Most of the world’s jet fuel is refined in Asia – South Korea is the No. 1 exporter – but Asian countries are starting to limit jet fuel exports because their crude oil also comes from the Middle East,” Efthimiou said.
Still, the EU is trying to build confidence that it is prepared to manage any future jet fuel shortages and is encouraging people to travel.
“While we need to be prepared for the worst, we also need to avoid sending overly negative and worrying messages that create confusion or even panic among the traveling public,” Apostolos Tzitzikostas, the European Commissioner for Sustainable Transport and Tourism in Cyprus, said on Wednesday. “We are making every effort to anticipate and control the impact of this difficult situation.”
But he also added “If our citizens or potential tourists from third countries do not feel confident enough to book tickets over the holidays, [economic] “The crisis will come sooner than we think.”
Edited by: Carla Bleiker