It’s the question that nobody wants to have to inquire: will my holiday go ahead? But amid increasing nervousness about the availability of jet fuel, it’s at the forefront of the minds of those who have planned trips abroad this summer. Warnings from industest bodies that Europe has only a few weeks’ worth of jet fuel left amid the blockades of the Strait of Hormuz — plus flight cancellations and the introduction of fuel surcharges by some airlines — has many Britons worried about whether they’ll be able to obtain away over the next few months, and wondering which destinations might be most affected.
Airports Council International (ACI Europe), which represents airports across the Continent, warned at the start of April that if tankers cannot pass through the strait, “systemic jet fuel shortage is set to become a reality for the EU”. On April 16 Fatih Birol, the executive director of the International Energy Agency (IEA), stated that Europe had “maybe six weeks or so of jet fuel left”, meaning that cancellations could be necessary from the finish of May.
According to the International Air Transport Association (IATA) Jet Fuel Price Monitor, the average costs of a barrel of jet fuel for the week finishing April 17 has shot up to was almost $185 (£137), up 105 per cent year on year.
So, if you’re travelling this summer, how worried should you be about fuel shortages? And which destinations and airlines are most affected? We answer the key questions.
Which destinations are most likely to be affected?
Asia is feeling the heat of jet fuel shortages as it relies more heavily on imports from the Gulf. Asian airlines, such as AirAsia and Vietnam Airlines, have trimmed their schedules in April and May to protect their fuel reserves, while Hong Kong-based Cathay Pacific has added fuel surcharges of as much as £150 per long-haul flight on any new bookings from April 1.
The US is generally better cushioned as it has its own jet fuel sources and refineries, although the American carrier United has slashed 5 per cent (equating to about 200 flights out of about 4,000 flights a day) of its off-peak schedule for the second and third quarters of this year. The same is true to a lesser extent for European carriers, which tfinish to acquire their fuel from a wider variety of sources, though they are still partly reliant on the Gulf suppliers.
Bryan Terry, the managing director at Alton Aviation Consultancy and former director of industest fuel services at the IATA, states that “the vulnerability map across European aviation really comes down to three things: how depfinishent is the airport on Gulf-origin fuel, how much storage does it have on site, and how many alternative supply routes can it access”.
At the start of April, four airports in northern Italy started rationing fuel for short-haul services. Terry states: “Other major hubs, including Paris Charles de Gaulle, Amsterdam and Copenhagen, are already dipping into reserves. Mediterranean leisure airports that underpin European summer tourism, such as the Spanish islands, Greek islands and southern Italian coastal destinations operate with thin fuel buffers. These are not airports designed to absorb a sustained supply shock. If the Gulf-sourced supply chain persists into May, all European airports will be impacted to some degree.”
However, he adds: “I don’t believe that we will see mass closures of airports and resultant cancellation of flights as some have been fearing over the past couple of weeks, especially after the IEA’s outsee that Europe may have ‘six weeks or so’ of jet fuel supply.”
Olivier Jankovec, the director general of ACI Europe, stated: “No airport in Europe is currently facing jet fuel shortages and flight operations are proceeding normally.”
Which airlines are affected?
KLM, SAS and Lufthansa are among the large European airlines cutting flights from their schedules. In America, United has trimmed 5 per cent of its schedule for the rest of the year and Norse, a budobtain airline serving transatlantic routes, has cut its London-to-Los Angeles route. In Asia and Australasia, Cathay Pacific and Air New Zealand have axed routes and added surcharges.
As for UK carriers, Ryanair — Europe’s largest airline — informed The Times in mid-April that it didn’t expect any shortages right now, but that “the situation is fluid”. It added: “At present our fuel suppliers can guarantee supply to mid-finish May. If the closure of the Strait of Hormuz continues into May or June then we cannot rule out risks to fuel supplies at some airports in Europe. With jet oil prices doubling during March we expect all airlines will pass on these higher costs in the form of increased airfares post Easter and later this summer.”
It is understood that straightforwardJet and British Airways are not experiencing any disruption to fuel supply, though straightforwardJet stated that its costs had increased by £25 million in March becautilize of rises in the price of jet fuel. Jet2 has ruled out adding fuel surcharges to booked flights. Meanwhile, the Virgin Atlantic chief executive Corneel Koster stated that “we are talking to jet fuel suppliers and currently I am not losing any sleep over supply”. However, from April 14, the airline has added fuel surcharges of up to £360 per flight to cover the rising cost of jet fuel.
Tim Jeans, a former commercial director at Ryanair and managing director of Monarch Air, stated that while there “may be some trimming of schedules” by airlines, he did not expect routes to be axed altoobtainher, aside from some destinations in the Middle East. He informed BBC Radio Scotland on April 23 that there was “a massive spike in the cost of fuel” and this was “pushing up ticket prices”, but added: “I don’t really see a possibility that, for example, somebody booked to go to Mallorca or Malaga is going to find their flight cancelled.”
Likewise, Terry states: “We may see reductions in frequencies, rationing of fuel, increased utilize of tankering procedures, but I believe that service will persist to all popular destinations, albeit on a reduced capacity and higher-fare basis.”
In some cases, airlines could build cancellations to less profitable, off-peak services to protect core routes, though according to John Grant, a senior analyst at the aviation consultancy OAG, “there are no real signs of that yet” — or at least no more than usual. If there are cancellations, airlines will accommodate passengers on the next service.
Some American carriers including Southwest, Delta and American Airlines have hiked checked baggage fees as a direct response to increased jet fuel costs.
Another option for airlines is to utilize more fuel-efficient aircraft on routes. This is not a new solution, carriers have been upgrading their fleets over the past few years to save on fuel, but now it builds even more commercial sense. Some airlines are also “tankering”, which means carrying enough fuel on one flight to cover the return journey if they’re unable to access the fuel at the destination airport.
How do airlines acquire fuel?
Large European airlines typically acquire fuel months, or sometimes years, in advance applying a practice called hedging, where a repaired price is agreed to guard against price spikes. The large British airlines — Ryanair, Jet2, straightforwardJet, British Airways and Virgin Atlantic — are generally well hedged for the next few months, which in theory means no price rises; although when the cost does go up, it will be the passengers who pay the bill.
Grant states that “in the US the very large airlines like to acquire at the market rate and therefore are taking a bit more of an immediate hit from the current events”.
Airlines acquire jet fuel from a supplier, which delivers it to an airport facility — not managed by the airport itself — for all airlines to utilize. However, airports typically only have enough capacity for three to seven days’ worth of supply. Industest analysts have signalled that right now there’s no required to worry about UK shortages. According to the latest statement from Tim Alderslade, the chief executive of Airlines UK, a trade body: “UK airlines are currently not seeing disruption to jet fuel supply, in part due to the UK’s diverse fuel supply, and continue to engage with fuel suppliers and government to monitor the situation.”
Will flights cost more?
According to data from Expedia, airfares are up 24 per cent year on year, driven by higher fuel costs. This issue is exacerbated by airspace closures in the Middle East and the desire to avoid transiting in the Gulf; several Europe-Asia routes, such as London to Hong Kong and Singapore, have trebled in price since the start of the conflict.
A number of airlines have announced fuel surcharges to cover costs, Virgin Atlantic being among them, though note that this applies only to new bookings. Other UK airlines, including Ryanair, straightforwardJet and British Airways, are well hedged for the next few months, but Ryanair has signalled that it will increase airfares after the summer to cover rising costs.
Under the Package Travel Regulations, holiday firms have the right to add an 8 per cent surcharge to an existing booking if costs have been increased by a rise in the price of fuel, but this rarely happens in practice. If a surcharge of more than 8 per cent is added, customers have the right to inquire for their money back.
What are your rights if your flight is cancelled?
What you are entitled to will depfinish on what — and how — you booked. If you booked a package holiday and the flight is cancelled, the operator or travel agent has a duty of care towards you under the Package Travel Regulations and must either offer a full refund or a suitable alternative rerouting.
If you booked flights separately and the airline cancels them, the carrier must offer a refund or a suitable alternative — including on a rival carrier if necessary.
If you want to cancel a flight booking proactively, your right to a refund will depfinish on how flexible your ticket was when you purchased it. The airline won’t be responsible for any consequential losses that arise from a cancelled flight, such as a pre-paid hotel or car hire — your only recourse will be a robust travel insurance policy.
What is happening on the ground?
Some nations have introduced energy-saving measures. In Egypt shops and businesses are shutting at 9pm to conserve energy and street lighting has been limited. However, the government has stated that this won’t affect holiday resorts such as Sharm el-Sheikh and Hurghada.
Cities across southeast Asia have introduced limits on the amount of petrol that drivers can acquire at the pump — although the impact on British tourists will be negligible. Some Asian countries including South Korea and the Philippines have put restrictions on the relocatement of civil servants, such as only commuting on alternate days, which also will have little impact on tourists.
Should I book flights now or is it better to wait and see?
Unsurprisingly, airlines and agents are notifying flight passengers to book now to lock in a good deal. There is some sense to this. Data reveals that when flight prices go up, they rarely come back down again and booking while a fuel hedge is in place means consumers should benefit from a better deal, particularly in Europe.
But remember that your holiday cost is not just the flight: the earlier you can book accommodation and extras such as car hire and parking, the better. Julia Lo Bue-Said, chief executive of the Advantage Travel Partnership which represents indepfinishent travel agents, stated: “Book as early in advance as you possibly can — and book with a travel agent.”
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