TORONTO — Executives for Europe’s biggest airlines were at the Airlines for Europe (A4E) Summit today in Brussels – and the cost of jet fuel and its impact on airfares was a hot topic during interviews, keynote speeches and panel discussions.
Michael O’Leary, chief executive of Ryanair, said “if the Strait of Hormuz remains closed, oil prices will remain elevated and I think that inevitably will flow through to higher fares.”
O’Leary added: “I wouldn’t foresee any issues with the supply of jet or flight cancellations. It is very difficult to see the U.S. and Israel keeping up this level of attrition beyond another five or six weeks.”
Deutsche Lufthansa AG CEO Carsten Spohr noted that airlines will have a tough time absorbing the extra fuel costs without means of mitigation. “The average profit in my company is about 10 euros per passenger,” Spohr told reporters.
Also at the A4E Summit, IATA Director General Willie Walsh told Reuters there are “no winners” in the current situation: “It’s going to impact on everybody. There’s jet fuel produced in the Middle East that goes into North America, there’s jet fuel that goes into Asia.”
Walsh also told Reuters that while demand for air travel is still strong, the ongoing conflict and fuel costs could ultimately drive carriers to cut capacity.
Major U.S. airlines say they are not expecting a significant dent in quarterly profits despite soaring jet fuel costs tied to the war in the Middle East adding hundreds of millions of dollars in expenses.
Airline executives from Delta, American and United told investors earlier this week that strong ticket sales are helping offset those higher costs, with all three carriers reporting record bookings this year. The airline leaders’ comments suggest that travellers are buying now to lock in lower airfares before carriers adjust rates further as the summer travel season approaches.
Air New Zealand, SAS and Qantas were among the first to announce fare hikes.
Here in Canada, Air Canada spokesman Peter Fitzpatrick noted that “all airlines are subject to the current volatility” and that the price of bookings changes constantly — partly in response to those ups and downs. Air Canada spent more than $5.1 billion on fuel in 2024, amounting to 24% of the carrier’s operating costs – its largest expense.
WestJet spokeswoman Julia Kaiser said “the recent sharp increase due to the situation in Iran has already made operating flights more expensive. Based on this, it’s likely further pricing adjustments may be needed.”
Air Transat has already begun to tack on higher fuel surcharges for flights to Europe as jet fuel prices soar.
“What we’re also doing is currently raising fares on peak travel dates and routes where we see less competition,” Transat A.T. Inc. CEO Annick Guérard told analysts on a conference call.
With files from The Canadian Press and The Associated Press
