Tense calm among airlines after aviation fuel prices doubled: “It is difficult to predict what will happen beyond four weeks”

The fuel crisis triggered by the war in Iran and the resulting closure of the Strait of Hormuz is forcing many airlines, right at the start of the tourist season, to work with short-term forecasts. EasyJet, its General Manager for Southern Europe, Javier Gándara, explained this morning in Palma that the company can only guarantee stability in prices and occupancy levels for the next four weeks. In the current context, Gándara said, predicting how markets and fuel availability will behave has become a “difficult” task.

Volatility in crude oil and aviation kerosene prices is keeping much of the airline sector in Spain and the Balearic Islands on alert. EasyJet, just as Ryanair’s spokesperson explained in an interview with this newspaper, has secured 70% of its kerosene consumption for the next six months at a fixed price of around 700 dollars per metric tonne, at a time when aviation fuel has doubled in price since before the pandemic, now reaching 1,500 dollars.

“This summer season we will only be affected by the remaining 30%, which will allow us not to face a very large increase in costs and to see how we can mitigate the impact on ticket prices”, Gándara explained. In his remarks, he did not rule out the possibility that fares could rise in the coming months. It will be in winter, once the airline has to return to the market to buy aviation kerosene again, when, if the conflict has not ended and the strait has not reopened, the company could be more seriously affected by the rise in fuel prices.

As for fuel reserves, an issue that concerns the sector and which could become a decisive factor in ticket prices if a shortage scenario emerges, easyJet says it is monitoring those reserves on a daily basis while maintaining direct contact with suppliers and airport operators. “It seems that in the short term supply is guaranteed. It is true that in Spain the situation is somewhat better, but if other European countries end up being affected, we will be affected too”, Gándara admitted. In Spain, only 11% of crude oil is imported from the Middle East, and more than 80% of aviation fuel is refined in the country, which helps create a climate of tense calm among airlines, which at least see that in one of the strongest tourism markets reserves are guaranteed, at least for the start of the season.

EasyJet’s General Manager for Southern Europe pointed to supply and demand as the determining factor in any possible price escalation the airline may face. According to him, Spain and Mallorca are “safe and refuge destinations” that could benefit from a temporary diversion of traffic because of growing international tension, although the rise in prices caused by the conflict in Iran, which also affects passengers’ pockets, could have the opposite effect and ultimately reduce demand.

Pause in demand

On this latter point, passenger behaviour in times of uncertainty, Gándara acknowledged a “pause” in the number of bookings due to the caution shown by many travellers who “are waiting to see what happens for the summer”. For this season, easyJet plans to operate three million seats in Mallorca alone and, depending on how the market evolves in the coming weeks, the company could gradually adjust demand.

“Mallorca is a very well-served destination, with 35 routes, but we will have to see what adjustments we make, because rather than adjusting capacity or frequencies it could be more a matter of load factors, with planes arriving somewhat fuller or emptier”, Gándara said. EasyJet therefore hopes it will not have to cancel flights or bookings during the current season and completely rules out increasing fares for tickets that have already been purchased, as other airlines such as Volotea have already done.

The company recommends that customers “buy their tickets as early as possible, because that is when they will get them at the lowest price”, although it also acknowledges that some travellers still do not know whether they will be able to afford a holiday this year.

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