Higher Europe air fares ‘inevitable’, says industry head

Higher ticket prices for air travellers in Europe are “inevitable” because of the high cost of jet fuel, according to the head of the International Air Transport Association.

Although some airlines have cut their European fares recently because of a lack of demand, Willie Walsh said there was no way airlines could absorb the extra costs over time.

He told the BBC there was still concern the industry in the UK could face shortages of fuel over the summer, although he insisted there was no need to panic.

However, he noted that even if the Strait of Hormuz were reopened tomorrow, the impact of disruption caused by the conflict in the Middle East could still be felt into next year.

A government spokesperson said UK airlines were “clear that they are not currently seeing a shortage of jet fuel”.

The closure of the Strait of Hormuz as a result of the conflict in Iran has had a dramatic impact on jet fuel prices and raised concerns about possible shortages in the months to come.

Europe, and the UK in particular, are usually highly reliant on imports from the region, and have been scrambling to find alternative supplies.

Last week, for example, the EU said there was no regulatory reason why US-grade jet fuel should not be used by European airlines, provided its introduction was managed carefully.

On Wednesday, the EU’s energy commissioner, Dan Jorgensen, said he did not expect a serious shortage in the short term, but could not rule out supply issues in the longer term.

The chief executive of the travel operator Tui, Sebastien Ebel, also said he did not expect shortages over the coming months.

But Walsh said there were still concerns for UK operators.

“I think the major problem facing the UK is timing,” he explained. “You normally expect to see a 25% increase in flights and fuel requirements in the months of July and August versus, let’s say March.

“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.”

However, he stressed that there was no reason to panic, and that widespread cancellation of flights could be avoided.

Some significant ticket price hikes

The increase in fuel prices has already been reflected in the cost of long-haul flights, some of which have seen significant increases.

But according to airline bosses, some fares in Europe have actually come down because carriers have been introducing discounts in an effort to persuade reluctant travellers to fly.

However, Walsh insisted this situation would not last.

“There’s just no way airlines can absorb the additional costs they’re experiencing,” he explained.

“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.”

He added that the disruption to crude oil supplies and damage to refining facilities in the Gulf meant that even if the Strait of Hormuz were to reopen now, fuel prices were unlikely to come down quickly.

“Whichever way you look at it, I think this issue will continue for a number of months to come, and may indeed continue into next year,” he said.

A government spokesperson added that fuel suppliers keep “stocks of bunkered fuel to support their resilience”, and that the government was working with the aviation industry to keep flights operating, as well as consulting on “measures to help airlines plan realistic flight schedules which will avoid last-minute disruption and protect holidays”.

Source: BBC

--Agencies