Europe’s biggest airlines say fuel price spike caused by Iran war will drive up fares | Airline industry


Europe’s biggest airlines have said that that the spike in fuel prices caused by the war in the Middle East will drive up fares and are advising passengers to book early.

While carriers have partly hedged the price of jet fuel, bosses said they could not avoid passing on additional costs to passengers for long.

Long-haul airlines such as Air France-KLM and Lufthansa said they would be adding more flights via Asia with Gulf carriers’ hubs either shut or operating at a reduced level since the US-Israel attack on Iran.

EasyJet dismissed any fears of imminent fuel shortages affecting flights in Europe despite concerns about supplies in parts of Asia, with Vietnamese airlines this week alerting that they may reduce schedules.

Kenton Jarvis, the airline’s chief executive, said they were “not seeing any issues” with their fuel supply. However, he said passengers should book as early as possible, with hedges on the price starting to unwind, spelling higher fares.

Ryanair’s Michael O’Leary likewise downplayed immediate changes but said that if fuel price increases “drag on for six months”, it would become an issue for airlines.

According to Iata’s jet fuel monitor, the price of kerosene was already 94% up on the annual average at the end of last week, and the price of crude oil rose sharply again sharply on Thursday after escalating hostilities.

The executives were speaking in Brussels as part of Airlines for Europe (A4E), a trade and lobbying group covering 16 airline groups, including BA’s owner, IAG; Air-France-KLM; and Lufthansa.

There were indications that there could also be silver linings in the crisis for Europe’s long-haul carriers, if they managed to reassert their global role after ceding ground to the airlines and airport hubs in the Gulf.

Lufthansa said it had added 40 flights to Asia to compensate for disruption in the Gulf. Air France-KLM said it was also boosting capacity to Asia, recapturing some market share on the back of “very healthy” demand on routes to Asia and Africa.

BA this week announced direct flights to Melbourne, in Australia, extending flights via Kuala Lumpur in Malaysia from London Heathrow. It said it was adding more services to destinations such as the Caribbean that avoid flying through congested and disrupted Middle Eastern airspace.

A4E bosses put out a collective statement urging Europe’s leaders to back the industry by cutting green taxes, saying they were “losing competitive ground to non-EU airlines, destinations and hubs that do not face similar regulatory obligations”.

They said it would be a choice between “growing connectivity or a cutback in routes”, adding: “The large-scale airspace shutdowns 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.”

The airlines called on the EU to amend its upcoming mandates for greener fuel, with a minimum 6% blend of sustainable aviation fuel by 2030, including 0.7% eSAF, a synthetic fuel derived from renewable energy rather than the current feedstock, which primarily uses cooking oil.

Jarvis said: “We are calling for the eSAF mandate to be postponed until eSAF is actually available.”

However, the EU’s transport commissioner, Apostolos Tzitzikostas, indicated that the call was unlikely to be immediately heeded, telling Reuters it was up to the industry to invest in the fuels.



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