Jet fuel spike hits fares

Jet fuel in the United States jumped from $2.50 a gallon on February 27 to $4.88 a gallon on April 2 after the February 28 attacks on Iran, and airlines are already cutting flights because fuel is usually their biggest cost after labor. (cnbc.com) That kind of jump hits airlines the way a sudden doubling in grocery bills hits a family budget: every seat they sell has to carry a bigger share of the fuel bill. Airlines For America’s daily index showed U.S. jet fuel at $4.81 a gallon on April 7, which means the spike was still near peak levels this week. (airlines.org) The squeeze starts with geography. A large share of the world’s oil and fuel moves through the Strait of Hormuz, and the effective closure described by CNBC choked off supplies of crude oil and refined products like jet fuel at the same time. (cnbc.com) Airlines do not buy fuel from one giant global tank. A plane has to refuel where it lands, so a carrier based in the United States can still get caught by shortages in Europe or Asia if local supply dries up or if deliveries are delayed. (cnbc.com) That is why long international routes get hit first. United Airlines chief executive Scott Kirby said late in March that the carrier would have to cut back flights to Asia, where United has more service than any other U.S. airline, because fuel costs and supply risks were becoming too hard to absorb. (cnbc.com) Lufthansa is drawing up contingency plans too. CNBC reported that Deutsche Lufthansa chief executive Carsten Spohr told employees the airline was preparing for weaker demand or a lack of jet fuel, and that some aircraft could be grounded. (cnbc.com) The price pressure is not just an American story. The International Air Transport Association said the global average jet fuel price rose 7.1% in the latest reported week to $209 a barrel, showing that carriers far from the Persian Gulf are still paying for the disruption. (iata.org) Europe looks especially exposed because it imports more of its fuel and many of its long-haul flights depend on refueling points closer to the disrupted trade lanes. Willie Walsh of the International Air Transport Association said Asia is most vulnerable, followed by Africa and Europe, even after a ceasefire was announced. (bloomberg.com) That helps explain why summer travelers in the United Kingdom and European Union are being warned about fare volatility rather than one clean price increase. When fuel costs swing this fast, airlines often respond with a mix of higher base fares, surcharges, and schedule cuts instead of a single across-the-board hike. (travelandtourworld.com) (bloomberg.com) Some carriers have already moved from warnings to action. Bloomberg reported that AirAsia X raised fares by as much as 40%, Thai Airways said fares would rise by 10% to 15%, and United has trimmed roughly 5% of capacity. (bloomberg.com) The ceasefire announced on April 7 may ease the panic, but it does not refill tanks overnight. Walsh said jet fuel and ticket prices would remain elevated for some time, and airline executives in Singapore warned that supply chains and refinery infrastructure could take months to normalize. (bloomberg.com) So the summer airfare story is no longer just about vacation demand. It is about a fuel market that broke faster than airlines can rewrite schedules, which is why travelers in the United States, the United Kingdom, and the European Union are likely to see fewer seats, sharper price swings, and more expensive last-minute tickets in the months ahead. (cnbc.com) (travelandtourworld.com)