Jet Fuel Price Surge Threatens European Aviation Stability

The European aviation sector is facing a critical operational crisis as jet fuel prices skyrocket following the blockade of the Strait of Hormuz. Michael O'Leary, CEO of Ryanair, cautioned that several competitors may face 'real failures' if prices remain elevated through the peak summer travel season. The geopolitical instability in the Middle East, which began on February 28, has severely disrupted the supply of Jet A-1. According to O'Leary, prices have surged from approximately $80 per barrel in March to $150, while data from the International Air Travel Association (IATA) shows average prices reaching $179 per barrel for the week ending April 24. The impact varies significantly based on corporate hedging strategies. Ryanair claims to be the most insulated carrier in Europe, having hedged 80% of its fuel requirements. In contrast, EasyJet reported a headline loss between £540 million and £560 million for the six months ending March 31, noting an additional £25 million in fuel costs for March alone. Major carriers are already slashing capacity to mitigate losses. Lufthansa has cut 20,000 short-haul flights through October to save 40,000 metric tons of fuel. Similarly, SAS is cancelling 1,000 flights in April, and KLM is reducing its capacity by 80 flights. The International Energy Agency (IEA) warns that Europe could face acute shortages within six weeks, as the region previously relied on the Middle East for 75% of its net jet fuel imports. O'Leary emphasized that the reopening of the Strait of Hormuz is essential to stabilizing the industry.