Aviation Crisis: War in Iran Threatens Summer Travel and Jet Fuel Supplies
Post-Pandemic Turmoil: European Carriers Brace for Supply Shocks and Holiday Uncertainty
European airlines are facing their greatest challenge since the COVID-19 pandemic, as the war in Iran pushes jet fuel prices upward, creating uncertainty for the summer holiday season.
Carriers have largely weathered the crisis through hedging measures that limited costs, even as jet fuel prices soared by nearly 84% since the conflict began on February 28. However, they could face supply shortages if the war does not end soon.
"There is a risk we might see fuel rationing, particularly in Asia and Europe," Willie Walsh, head of the International Air Transport Association (IATA), told Reuters, adding that supply currently remains strong.
Walsh noted, however, that the situation is not yet as severe as the disruption caused by the COVID-19 pandemic in 2020, which led to a vertical drop in travel demand and losses of hundreds of billions of dollars for the aviation sector.
"I think COVID was on a completely different scale," Walsh added. "What we are seeing here is, in fact, a cost issue for airlines. The underlying demand for travel remains strong, and that is positive."
Airlines are now warning that their hedging measures—which help lock in fixed prices—are being exhausted. Prospects are becoming increasingly uncertain as travelers delay bookings or plan trips closer to home to avoid potential disruptions and higher prices.
Sweden’s Energy Minister, Ebba Busch, issued an "early warning" on Tuesday regarding potential jet fuel shortages despite good current supply, advising Swedes to reconsider their travel plans.
Ryanair CEO Michael O’Leary, however, downplayed these concerns. "We believe the risk of supply disruption is receding," he told Reuters, citing discussions with suppliers across Europe.
Jozsef Varadi, CEO of low-cost carrier Wizz Air, stated on Monday that summer bookings remain strong. However, easyJet and travel operator TUI announced a decrease in future bookings and issued profit warnings in recent weeks.
Meanwhile, Varadi warned that even an end to the conflict would not quickly resolve high fuel prices. "Even if the war in Iran stops, I don't think that will return fuel prices to where they were two months ago," he told reporters in London.
Air France-KLM, IAG (owner of British Airways), and Lufthansa are set to announce their first-quarter results starting this week. These carriers have already increased prices and reduced flight capacity in response to the war.
