Summer jet-fuel shock

Airlines are warning that summer flights will cost more and some will be cut as jet fuel supplies tighten across Europe and Asia. (iata.org) The International Air Transport Association said on April 17 that Europe could start seeing cancellations by the end of May if carriers cannot secure enough fuel. Willie Walsh, the group’s director general, said the problem is already hitting parts of Asia. (iata.org) Jet fuel is the kerosene-based fuel that powers commercial aircraft, and it is usually one of an airline’s biggest costs. Euronews, citing IATA, reported that fuel accounts for about 30% of airline expenses and that jet fuel prices have roughly doubled since the Iran war began. (euronews.com) The supply shock is tied to the Strait of Hormuz, the narrow shipping lane between the Persian Gulf and the open ocean. Euronews reported that the route handles about 20% of global crude exports, while around 40% of Europe’s jet-fuel imports normally pass through it. (euronews.com, euronews.com) European officials have not fully embraced the bleakest forecasts, but they are no longer dismissing the risk. On April 17, European Commission spokesperson Anna-Kaisa Itkonen said the market was “tight” and that Brussels was meeting weekly with member states and industry through its oil coordination group. (euronews.com) Airport operators have been more direct. Airports Council International Europe warned in an April 9 letter that, without a stable reopening of Hormuz within three weeks, a “systemic jet fuel shortage” in the European Union was set to become reality. (euronews.com) The price data show the squeeze in different ways on each side of the Atlantic. IATA’s fuel monitor said the global average jet-fuel price was $184.63 a barrel last week, while Airlines for America listed the Argus U.S. Jet Fuel Index at $4.08 a gallon on April 10 and $4.23 a gallon on April 22. (iata.org, airlines.org) Some carriers have already started trimming schedules. Euronews reported that Scandinavian carrier SAS said earlier this month it would cancel at least 1,000 flights in April, and The Associated Press reported on April 23 that Lufthansa Group plans to cut 20,000 short-haul flights through October. (euronews.com, apnews.com) For travelers, the practical issue is not only fare hikes but what happens if a booking changes after purchase. In the United States, the Department of Transportation’s automatic-refund rule requires airlines to refund passengers when a flight is canceled or significantly changed and the passenger declines the alternative offered. (transportation.gov, federalregister.gov) In Europe, passenger-rights rules still require airlines to offer care, rerouting or refunds in many cancellation cases, though compensation can depend on the cause of the disruption. If fuel stays scarce into late May and summer schedules, the pressure point will move from ticket prices to whether airlines can keep enough flights in the air. (airpassengerrights.eu, europarl.europa.eu)