Higher air fares in Europe "inevitable", says industry head

According to Willie Walsh, head of the International Air Transport Association, the rise in ticket prices for air travelers in Europe is "inevitable" due to escalating jet fuel costs. This assertion comes amidst reports that some airlines are currently lowering fares in an attempt to generate demand.

Walsh emphasized to the BBC that airlines will not be able to absorb the increased costs indefinitely, even with current fare reductions being offered by certain carriers.

There remains anxiety regarding potential fuel shortages within the UK airline industry this summer; however, Walsh reassured the public that there is no immediate cause for concern. He stated that even if the Strait of Hormuz were to reopen promptly, the ramifications from the ongoing conflict in the Middle East could persist into the following year.

As a representative of the airline industry, Walsh highlighted that the issue of jet fuel pricing continues to be a significant concern. A government spokesperson clarified that UK airlines have confirmed they are not currently experiencing a shortage of jet fuel.

The closure of the Strait of Hormuz, resulting from the Iran conflict, has substantially affected jet fuel pricing and raised fears of commodity shortages in the future. Europe, and specifically the UK, traditionally relies on this region for fuel imports and has been actively seeking alternative supply sources.

Last week, the European Union (EU) indicated there were no regulatory barriers preventing the use of US-grade jet fuel for European airlines, provided the introduction is managed with care.

On Wednesday, EU Energy Commissioner Dan Jorgensen expressed confidence that serious shortages would not occur in the short term, although longer-term supply challenges cannot be dismissed.

Sebastien Ebel, CEO of the travel operator Tui, likewise projected that shortages would not manifest in the immediate future. Nonetheless, Walsh reiterated existing concerns for UK operators, stating, "I think the major problem facing the UK is timing."

He explained that airlines typically see a 25% increase in flight volume and fuel requirements during the peak months of July and August compared to March. Walsh stressed that without adequate alternative supplies, potential shortages could emerge during the summer peak travel season. However, he aimed to alleviate fears by stating there was no need for alarm and that the cancellation of flights on a widespread scale could be averted.

Some significant ticket price hikes

The rise in fuel prices has already begun to impact the cost of long-haul flights, leading to notable increases in certain ticket prices. Conversely, some European airlines have reduced fares as part of efforts to attract hesitant travelers back to flying.

However, Walsh insisted that such price reductions are a temporary measure. "There's just no way airlines can absorb the additional costs they're experiencing," he stated.

He continued, "There may be some instances where airlines will discount to stimulate traffic flow, but over time it is inevitable that the high cost of oil will be reflected in increased ticket prices."

Further complicating matters, the disruptions to crude oil supplies and the damage to refining facilities in the Gulf region mean that even if access to the Strait of Hormuz were restored immediately, fuel prices are unlikely to drop in the near term. Walsh concluded by asserting that this issue will persist for several months, possibly extending into the next year.

A government spokesperson mentioned that fuel suppliers maintain "stocks of bunkered fuel to support their resilience," and that the government is collaborating with the aviation sector to ensure continuous flight operations while consulting on measures to help airlines develop realistic flight schedules that minimize last-minute disruptions and safeguard travelers' holidays.