Europe’s biggest airlines say fuel price spike caused by Iran war will drive up fares

Carriers warn they cannot hold off passing on costs for long, while some airlines plan to increase flights via Asia

Europe’s biggest airlines have said the rise in fuel prices caused by the war in the Middle East will drive up fares and are advising passengers to book early.

While carriers have partly hedged the price of jet fuel, bosses said they could not avoid passing on additional costs to passengers for long.

Long-haul airlines such as Air France-KLM and Lufthansa said they would be adding more flights via Asia with Gulf carriers’ hubs either shut or operating at a reduced level since the US-Israeli attack on Iran.

EasyJet dismissed any fears of imminent fuel shortages affecting flights in Europe despite concerns about supplies in parts of Asia, with Vietnamese airlines this week warning that they may reduce schedules.

Kenton Jarvis, the airline’s chief executive, said it was “not seeing any issues” with its fuel supply. However, he said passengers should book as early as possible, with hedges on the price starting to unwind, spelling higher fares.

Ryanair’s chief executive, Michael O’Leary, likewise downplayed immediate changes but said that if fuel price increases “drag on for six months” it would become an issue for airlines.

According to Iata’s jet fuel monitor, the price of kerosene was already 94% up on the annual average at the end of last week, and the price of crude oil rose sharply again on Thursday after escalating hostilities.

The executives were speaking in Brussels as part of Airlines for Europe (A4E), a trade and lobbying group covering 16 airline groups, including BA’s owner, IAG; Air-France-KLM; and Lufthansa.

There were indications that there could also be silver linings in the crisis for Europe’s long-haul carriers, if they manage to reassert their global role after ceding ground to airlines and airport hubs in the Gulf.

Lufthansa said it had added 40 flights to Asia to compensate for disruption in the Gulf. Air France-KLM said it was also boosting capacity to Asia, recapturing some market share on the back of “very healthy” demand on routes to Asia and Africa.

BA this week announced direct flights to Melbourne in Australia, extending flights via Kuala Lumpur in Malaysia from London Heathrow. It said it was adding more services to destinations such as the Caribbean that avoid flying through congested and disrupted Middle Eastern airspace.

However, tourism to Europe could be hit, the consultancy Oxford Economics warned, with almost 28m outbound trips from the Middle East at risk. It said Turkey, France and the UK were particularly vulnerable with a typically higher share of Middle Eastern visitors.

Mediterranean destinations such as Spain, Portugal and Greece could benefit as alternatives for those who might have visited the Gulf, it said.

A4E bosses put out a collective statement urging Europe’s leaders to back the industry by cutting green taxes, saying they were “losing competitive ground to non-EU airlines, destinations and hubs that do not face similar regulatory obligations”.

They said it would be a choice between “growing connectivity or a cutback in routes”, adding: “The large-scale airspace shutdowns in the Middle East are a reminder of our resilience and how important EU airlines and hubs are for connectivity with the rest of the world.”

The airlines called on the EU to amend its upcoming mandates for greener fuel, with a minimum 6% blend of sustainable aviation fuel by 2030, including 0.7% eSAF, a synthetic fuel derived from renewable energy rather than the current feedstock, which primarily uses cooking oil.

Jarvis said: “We are calling for the eSAF mandate to be postponed until eSAF is actually available.”

However, the EU’s transport commissioner, Apostolos Tzitzikostas, indicated that the call was unlikely to be heeded immediately, telling Reuters it was up to the industry to invest in the fuels.

Transport & Environment, a campaign group that advocates for clean transport and energy, condemned the call. Camille Mutruelle, the group’s aviation policy officer, said the airlines were “generating the very uncertainty that is preventing the scale-up of sustainable aviation fuel”, adding: “No credible industrial policy can survive if targets are treated as optional. And no investor will commit to future clean technologies under such conditions.”