Fuel crunch could spike fares

A jet fuel squeeze is starting to hit summer travel plans, with airlines and analysts warning that fares could rise and flights could be cut across Europe and Asia. (washingtonpost.com) The shortage is tied to disrupted fuel shipments through the Strait of Hormuz after the Iran war choked off a key export route for Gulf energy. Reuters reported on April 15 that Europe had depended on the Gulf for nearly 75% of its jet fuel imports, about 375,000 barrels a day. (reuters.com) The International Energy Agency’s Fatih Birol said on April 16 that Europe had “maybe six weeks or so” of jet fuel left if the disruption continued. Willie Walsh, director general of the International Air Transport Association, said cancellations in Europe could start by the end of May and were already happening in parts of Asia. (apnews.com) (euronews.com) Fuel is usually airlines’ biggest operating expense, accounting for about 25% to 30% of costs, so a supply shock tends to move quickly into ticket prices and route cuts. The International Air Transport Association’s fuel monitor said the global average jet fuel price was $184.63 a barrel last week, even after a 6.7% weekly drop. (iata.org 1) (iata.org 2) Some airlines have already started cutting schedules. Scandinavian carrier SAS said in March that it would cancel 1,000 flights in April after jet fuel prices doubled in 10 days, according to Reuters and Euronews. (reuters.com) (euronews.com) European officials are now trying to keep planes fueled through the peak season. Reuters reported on April 17 that the European Union was preparing guidance to diversify supplies, including more imports from the United States, and on April 22 that Brussels was considering stockpiling and redistribution plans. (reuters.com 1) (reuters.com 2) Replacement barrels are arriving, but not enough to erase the risk. Reuters data showed record April inflows from the United States and Nigeria into Europe, while Germany’s economy minister said on April 21 that supplies were not yet in danger and refineries were adapting to higher demand. (reuters.com 1) (reuters.com 2) For travelers, the timing is the problem: summer demand is rising just as airlines are paying more for fuel and guarding schedules. Analysts quoted by CNBC said the first half of peak season is the safer booking window, because a longer disruption would leave carriers more likely to raise fares, trim frequencies, or drop weaker routes later in the summer. (cnbc.com) If fuel keeps moving, the worst-case scenario may be avoided. If it does not, the summer airfare spike many travelers fear is likely to show up first on long-haul flights to and within Europe and Asia. (washingtonpost.com)