The head of the International Air Transport Association (IATA) has warned that airlines are unable to continue absorbing the rising costs caused by disruptions in the Strait of Hormuz, which will inevitably lead to higher ticket prices for passengers.
Willie Walsh, IATA's director general, stated in a BBC interview that while there is no immediate cause for alarm over jet fuel shortages, the increasing fuel prices will inevitably be passed on to consumers. “There’s just no way airlines can absorb the additional costs they’re experiencing,” he said. “There may be some instances where airlines will discount to stimulate some traffic flow… but over time it’s inevitable that the high price of oil will be reflected in higher ticket prices.”
Walsh did not foresee widespread cancellations but expressed concern about potential shortages during the peak summer period if sufficient alternative supply is not secured. “I think the concern will be that if sufficient alternative supply isn’t sourced, there may be some shortages when we get into the peak summer period,” he added.
Last week, British Airways’ parent company IAG warned that its profits would be impacted, expecting to spend approximately two billion euros (£1.72 billion) more than planned on fuel this year. Chief executive Luis Gallego said IAG does not believe there will be “any interruption for the summer” regarding jet fuel supplies.
Earlier this month, Transport Secretary Heidi Alexander assured that summer holiday plans would not face major disruption due to shortages. She revealed that additional fuel has been imported from the United States, and UK refineries have increased production. The government has also implemented a temporary rule change allowing airlines to consolidate passengers from different flights onto fewer planes to conserve fuel.
Data from aviation analytics company Cirium indicates that airlines have increased flight cancellations for May. As of Tuesday, airlines have cancelled 296 departures from UK airports this month, representing 0.75% of the total, up from 120 cancellations six days ago. However, figures for the peak summer months show limited week-on-week schedule reductions. The number of outbound flights planned for June is 48 lower than a week ago, after 0.2% of flights were cancelled. For July, the reduction is 31, and for August, just four.
Airlines can avoid liability for compensation if they cancel a flight with at least two weeks’ notice, allowing them to delay decisions on summer cancellations without financial penalties. The price of jet fuel has more than doubled since the start of the Middle East conflict, as Iran continues to restrict tanker passage through the Strait of Hormuz.
A government spokesperson commented: “UK airlines are clear that they are not currently seeing a shortage of jet fuel. Aviation fuel is typically bought in advance and airports and suppliers keep stocks of bunkered fuel to support their resilience. We continue to work with fuel suppliers, airports, airlines and international counterparts to keep flights operating. We are also consulting on measures to help airlines plan realistic flight schedules which will avoid last-minute disruption and protect holidays.”
