Many Europeans may have to rethink their holiday plans this summer, as the blockade of the Strait of Hormuz is leading to a shortage of jet fuel and airlines are being forced to hike ticket prices.
The price of jet fuel has doubled since the start of the US and Israeli strikes on Iran.
A barrel of jet fuel has jumped from 80 euros in February to 180 euros at the end of April, Marina Efthymiou of Dublin City University told DW. “If fuel prices, which make up between 25% and 50% of airlines' total costs, remain the same "If the prices are high and the companies themselves have not insured themselves against this risk, they could go bankrupt," she explains.
A shortage is also expected very soon. Two weeks ago, the International Energy Agency warned that Europe has enough jet fuel for another six weeks. The continent uses about 1.6 million barrels a day, 1.1 million of which are produced domestically, but much of the rest comes from the Middle East through the Strait of Hormuz, which has been blocked for weeks.
Higher fares and fewer flights
The companies are reacting differently. Air France-KLM announced that it was introducing a surcharge of 100 euros for long-haul flights, while Lufthansa plans to cancel 20,000 short-haul flights in the next six months. SAS will cancel about 1,000 flights. "We have to do it, because otherwise we will go bankrupt in a few months," she admitted. Sebastian Justum, deputy director of Air France-KLM.
Uncertainty and additional costs are also pushing up ticket prices, observers say, with prices up 24% in the past year, according to consultancy Airfare.
The Association of European Airlines, which represents 16 airlines on the Old Continent, has called on the European Union (EU) to adopt urgent measures to limit the effects of the war in Iran. Among the proposed measures are to drop the obligation to fill more than 90% of fuel in Europe, as well as to temporarily suspend emissions trading, which obliges airlines operating in the EU to pay for carbon emissions.
EU tries to coordinate supplies and distribution
„In just 60 days since the conflict began, our costs of importing fossil fuels have increased by more than 27 "€1 billion," European Commission President Ursula von der Leyen said recently. She also stressed that coordinated action between member states is essential. "We propose closer cooperation not only on filling national gas storages, but also on fuel stocks - especially for jet fuel and diesel, where markets are tightening," von der Leyen said.
Last week, the European Commission launched its "AccelerateEU" plan, which involves monitoring jet fuel stocks and coordinating supplies to airlines and airports across the bloc.
And while experts acknowledge that coordination between member states can soften the effects of the crisis, it cannot replace insufficient supplies. "It can prevent national shortages from causing panic across the continent, but it cannot create fuel that is missing," said Efthymiou of the Dublin-based university.
„Extremely difficult situation"
Jet fuel exporters are facing increasingly limited resources. „A large part of kerosene is refined in Asia. South Korea is the largest exporter, but Asian countries are starting to limit exports because crude oil also comes from the Middle East," explains Efthymiou.
However, the EU is trying to convey confidence that it is ready to deal with a possible jet fuel shortage in the future, even encouraging people to travel. „While we need to prepare for the worst-case scenario, we must also refrain from sending overtly negative and alarmist messages that create confusion and panic among travellers," said Apostolos Tsitsikostas, EU Commissioner for Sustainable Transport and Tourism. „We are doing everything we can to anticipate and limit the impact of this extremely difficult situation", adds Tsitsikostas.