How the Iran war is hurting travelers, airline industry

Jet fuel prices have more than doubled since the US and Israel first attacked Iran in February. The reason: Both Iran and the US have at different points blocked the Strait of Hormuz, a key waterway for a fifth of the world's oil and gas tankers.

Marina Efthymiou, an aviation management professor at Dublin City University, told DW that jet fuel prices in Europe rose from about €68.27 ($80) per barrel in February to €153.84 ($180) at the end of April, according to the International Air Transport Association.

"If fuel prices, which represent 25% to 50% of an airline's total operating expenses, remain high and airlines have not hedged, they could go bankrupt," she said.

In addition to spiraling prices, a shortage of jet fuel is expected soon. Two weeks ago, the head of the International Energy Agency warned that Europe has about six weeks of jet fuel left. 

Europe consumes about 1.6 million barrels of jet fuel daily on average, and procures 1.1 million barrels from domestic sources. A large chunk of the rest — 500,000 barrels — used to come from the Middle East via the Strait of Hormuz, which is now all but impassable.

Air travel to cost more as airlines slash flights, add surcharge 

Some airlines are transferring this price spike to customers. Air France-KLM has reportedly imposed a surcharge of €100 on long-haul flights , while Lufthansa announced on April 22 that it would cut 20,000 short-distance flights of the next six months. Scandinavian Airlines will cancel around 1,000. 

"We are obliged to do so, because otherwise we just are bankrupt in a few months," Sebastien Justum, Air France-KLM's senior vice president, said at a recent event in the European Parliament. 

Airfare has increased by 24% over the year, according to a recent report by Teneo, an advisory firm. 

Andrew Charlton, managing director of the Aviation Advocacy consultancy, said that while fuel supplies are currently sufficient, there is a lot of uncertainty about the future.

"That uncertainty, and the extra cost of keeping the tanks full, is making tickets more expensive," he told DW. "Travelers should expect fewer seats and fewer bargains on the market."

What does the airline industry expect? 

Airlines for Europe (A4E), an association of 16 European airlines which claims to represent 80% of European air traffic, has called on the EU to take urgent measures to limit the impact of the Iran war.

A4E has asked the EU to relax obligations under the anti-tankering legislation, which requires flights to load 90% of the needed fuel within the bloc. Such laws are intended to discourage airlines from loading cheaper fuel in countries with lower environmental standards.

It has also called on the EU to temporarily suspend the bloc's Emissions Trading System, which compels airlines operating in the EU to pay for carbon emissions. 

"These are temporary measures to weather us through the current situation, plus more long-term planning to be prepared for the future," Ourania Georgoutsakou, managing director of A4E, said in a statement. 

Airports Council International (ACI), which describes itself as the voice of the world's airports, has called for imports from alternative locations, joint procurement by EU member states and more coordination. 

"The current levels of jet fuel prices and the prospect of a new cost-of-living crisis mean that many regional airports across our continent are likely to face both a supply and demand shock," said Olivier Jankovec, director general of ACI Europe, in a statement on April 28. "For them, this is nothing short of an existential threat." 

Jankovec did add, however, that airports in Europe are not yet dealing with fuel shortages.

Pathways to sustainable aviation

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European Commission stresses importance of inter-bloc coordination

"In just 60 days of conflict, our bill for fossil fuel imports has increased by over €27 billion," European Commission President Ursula von der Leyen said while addressing members of the European Parliament on Wednesday. 

She emphasized the importance of increased coordination among EU member states. 

"We propose stronger coordination, not only in filling national gas storage, but also when it comes to fuel reserves — especially jet fuel and diesel, where markets are tightening," von der Leyen said. 

Last week, the European Commission launched its AccelerateEU plan which includes monitoring jet fuel stocks and coordinating supplies to airlines and airports across the bloc.

Charlton of Aviation Advocacy said an EU-wide fuel observatory to map available supplies of jet fuel and optimize distribution is "up and running" and "praiseworthy."

Others said EU monitoring and coordination can mitigate the impact of a potential supply crunch, but may not prove a sufficient remedy if the crisis prolongs.

"It can stop a national-level shortage from becoming a continent-wide panic, but it cannot create fuel that isn't there," said Efthymiou of Dublin City University. 

Jet fuel exporters starting to keep more of their own supply

Exporters of refined jet fuel are also realizing they have an increasingly scarce commodity on their hands. 

"Much of the world's jet fuel is refined in Asia — South Korea is the No. 1 exporter — but Asian countries are starting to limit jet fuel exports because their crude also comes from the Middle East," said Efthymiou.

Still, the EU is trying to build confidence that it stands ready to manage any future jet fuel shortages and is encouraging people to travel.

"While we need to prepare for the worst-case scenario, we also need to refrain from sending overtly negative and alarming messages that create confusion, or even panic in the traveling public," said Apostolos Tzitzikostas, European Commissioner for Sustainable Transport and Tourism, in Cyprus on Wednesday. "We are doing our utmost to anticipate and contain the impact of this very difficult situation."

But he also added that "if our citizens or potential tourists from third countries do not feel confident enough to book the tickets in the holidays, an [economic] crisis will hit sooner than we think."

Edited by: Carla Bleiker