Fuel squeeze risk for airlines

Ryanair and EasyJet are preparing for possible jet-fuel shortages in Europe from early May if disruption in the Middle East keeps squeezing supply routes. (reuters.com, news.sky.com) Ryanair chief executive Michael O’Leary said on April 1 that up to 25% of the airline’s fuel supply could be at risk in May and June if the conflict continues. He told Sky News the threat could bring higher fares and operational disruption, not just isolated delays. (reuters.com, news.sky.com) EasyJet chief executive Kenton Jarvis has warned that passengers should expect higher ticket prices later in the summer as fuel hedges roll off and airlines buy more fuel at current market rates. Sky News reported that EasyJet has not announced cancellations, but has said costs are rising. (news.sky.com, express.co.uk) The immediate pressure point is the Strait of Hormuz, the narrow Gulf shipping lane that carries a large share of the world’s oil and refined fuels. Airports Council International Europe warned on April 10 that European airports could face a “systemic” jet-fuel shortage within three weeks if traffic through the strait does not resume in a stable way. (cnbc.com, euronews.com) That warning goes beyond airlines. Airports Council International Europe said the Gulf supplies about 50% of Europe’s jet-fuel imports, and it told European Union officials that many hubs were holding only 8 to 10 days of reserves. (wam.ae, visaverge.com) The industry’s other concern is timing. The warning lands weeks before Europe’s peak summer travel season, when airlines run fuller schedules and airports have less slack to absorb fuel rationing, flight cuts or tanker bottlenecks. (cnbc.com, bloomberg.com) Even a reopening of Hormuz would not quickly end the problem. International Air Transport Association director general Willie Walsh said on April 8 that jet-fuel supplies could take months to normalize because refinery disruption in the Middle East has already hit output. (aircargoweek.com, bworldonline.com) Fuel is usually the second-largest airline expense after labor, and the International Air Transport Association has put the average share at about 27% of operating costs. That means a supply crunch can hit airlines twice: first through higher prices, then through schedule cuts if fuel cannot be delivered where planes need it. (bworldonline.com, cnbc.com) For now, the warnings are still framed as contingency planning, not confirmed mass cancellations. The next test is early May: whether Gulf fuel flows recover fast enough for Europe’s airlines to keep the summer schedule intact. (reuters.com, cnbc.com)