Uk Airline 14-day Rule Consultation: Jet fuel doubles as airlines raise fares
The uk airline 14-day rule consultation now sits alongside a sharper problem for airlines: jet fuel has doubled in price over the last two months or so, according to Rafael Palacios, professor and head of the aeronautics department at Imperial. He called the rise “horrendous.”
Airlines have already started adjusting. Lufthansa announced on 22 April that it was cutting 20,000 flights, Virgin said it could not absorb higher fuel costs and would have to increase fares, IAG, which owns British Airways, said it was making some pricing adjustments, and EasyJet launched a book with confidence policy.
Imperial and airline pricing
Palacios said, “Jet fuel has doubled in price over the last two months or so, which is horrendous.” He added, “It is roughly the same cost as the petrol you use in your car was last year.” For passengers, the immediate effect is not abstract: airlines are already choosing between fewer flights, higher fares, and tighter booking rules.
By last weekend, Spirit airlines had gone bust, showing how quickly fuel costs are reaching airline balance sheets. The pressure comes while European carriers are trying to preserve summer schedules, and the consultation around the UK 14-day rule is unfolding against that cost backdrop rather than in isolation.
Strait of Hormuz fuel flows
Forty-one percent of European aviation fuel goes through the Strait of Hormuz, and market analysts at Kpler said global shipments of jet fuel and kerosene fell below 2.3 million tonnes last week. That leaves less room for airlines to absorb shocks if fuel routes stay constrained.
Richard Green, professor of sustainable energy business at Imperial College London, said, “The world uses about 100m barrels of oil a day, most of it from oilfields, a bit comes out alongside gas.” He added, “In normal circumstances, about 15m barrels a day would go through Hormuz.”
June supply pressure
Green said, “The UAE has got coastline on the Indian Ocean, Saudi Arabia has coastline on the Red Sea, there’s a bit of production increase in other countries, the world was producing more than it was using last year … so the real drop is five or 10 out of 100.” He also said, “They can do a bit to vary the proportions of diesels, gasolines, petrols, aviation fuels,” although “they can’t do it infinitely and probably couldn’t turn bitumen, the heaviest, stickiest part of the oil, into jet fuel, the lightest.”
Amrita Sen, founder of consultancy Energy Aspects, said, “essentially you can pick a number when it comes to the oil price. We will just not have any buffers.” She said that if the war dragged on until the end of June, all stocks would be depleted, and even if the war ended tomorrow, it would take months to return to pre-crisis flows.
