UK Airlines Face $1,838 Jet Fuel Price Impact Flights
Jet fuel price impact flights in Europe after prices jumped from $831 per tonne in late February to $1,838 by early April as supply from the Middle East tightened. Airlines have already raised ticket prices and trimmed capacity, and a further fuel squeeze could force more disruption during the peak summer holiday period.
Europe's $1,838 Fuel Spike
$1,838 per tonne marked the high point in early April, more than 120% above the $831 level seen in late February before the first US and Israeli airstrikes. By the time of the article, jet fuel had retreated but still traded above $1,500, leaving airlines with a cost base far above where it started the year.
More than half of Europe's jet fuel imports typically come from the Gulf, and the Strait of Hormuz had been blocked for the past eight weeks in the article's timeframe. Europe relies heavily on imported fuel because it lacks enough refining capacity, so a disruption in that route quickly feeds into the price paid by carriers across the region.
Amaar Khan Sees Tight Supply
Amaar Khan, head of jet fuel pricing at Argus Media, said: "We have had five refinery closures in the last two-and-a-bit years in Europe, whereas jet fuel demand has been rising year on year". The supply squeeze has arrived after two of the refinery closures in Britain, leaving just four refineries in the UK and less room to absorb a shock in imported fuel flows.
The UK is Europe's biggest consumer of jet fuel and depends on imports for 65% of its needs, making it the region's most exposed market if the Strait of Hormuz stays shut. The Gulf normally produces far more jet fuel than it uses itself and exports about 20% of the fuel traded on international markets each day, so any prolonged block can tighten supply well beyond the region where the disruption starts.
Airlines Face 25% to 30%
25% to 30% of airlines' operating costs typically go on fuel, according to IATA, which is why many carriers have already pushed up ticket prices as fuel has become more expensive. EasyJet has hedged 80% of its fuel supply, but hedging does not remove the pressure entirely if market prices keep climbing or if physical shortages appear.
Physical shortages could still emerge in some areas in the coming months if the Strait of Hormuz does not reopen soon, and that is the risk now hanging over summer schedules. For passengers, the practical fallout is narrower choice, higher fares and a greater chance of cancellations if airlines cannot secure enough fuel to keep all planned flights in the air.
