PARIS: Ryanair, Transavia, Volotea and other budget airlines are feeling the financial pain of high jet fuel prices as a result of the Middle East war and are cutting flights.
The closure of the Strait of Hormuz has taken a large portion of oil supplies off the market, sending the price of jet fuel skyrocketing and sparking fears of a shortage that could force airlines to cancel flights.
Airlines don’t wait for a supply shortage to respond.
“Travel Alert: Airlines are cutting thousands of flights right now,” Travel Therapy TV host Karen Schaler said in an Instagram feed last weekend. “Order early.”
That advice would win the approval of Ryanair chief Michael O’Leary, who earlier this month expressed concern that fears of fuel shortages were causing people to put off booking flights.
Low-cost carriers – which control a little more than a third of the global market according to various estimates – feel pinched at first because of the nature of their business model.
With cheaper tickets, they have less capacity to absorb the increase in fuel costs.
Some of the cancellations may be the normal adjustments airlines tend to make when demand does not meet expectations on certain routes.
“It’s not unusual for airlines to adjust their schedules at this time of year,” said financial analyst Dudley Shanley at investment bank Goodbody. AFP.
But “if jet fuel prices stay at this level, there needs to be a little bit more trimming for low-cost airlines,” he added.
If before the war airlines were able to maintain marginally profitable routes or even unprofitable routes, the increase in jet fuel prices will force them to make difficult choices.
It will begin with many in the high summer travel season.
– Unfortunately, it is very likely that many people’s holidays will be affected, either by flight cancellations or very, very expensive tickets, says EU Energy Commissioner Dan Jørgensen. Sky News last week.
‘Faster than the bear’
The speed with which airlines respond depends in part on the extent to which they secured fuel supplies in advance at fixed prices.
European airlines tend to do this to a greater extent than their competitors in other parts of the world.
Air Transat, a Canadian low-cost airline, has cut 6% of its May-October flight schedule.
Southeast Asia’s largest low-cost carrier, AirAsia X, announced on Friday that it would cut several flights and even some connections, without giving an overall figure.
Earlier this month, the Malaysia-based airline said no-frills that it was raising fares by up to 40% and that around 10% of its total flights had been cut so far.
Hungary’s low-cost airline Wizz Air has so far resisted cutting flights.
“We’re not taking the capacity out, because I think the other guys will take the capacity out,” its CEO Jozsef Varadi was recently quoted as saying by the trade magazine Aviation Week.
“You don’t have to run faster than the bear, but faster than the guy next to you,” he added.
He may have been thinking of the most spectacular cuts made in the industry by the German group Lufthansa, which had just announced that it would cut 20,000 flights from its schedule until October, along with stopping its regional feeder airline CityLine.
Its European rival Air France-KLM has cut 2% of May and June flights at its low-cost Transavia subsidiary.
KLM has kept cancellations down to 1% of its European flights.
Ryanair did not cite fuel prices but high costs and taxes when it announced last week that it would reduce flights to and from Berlin from October.
It also cuts 10% of flights from Dublin and criticizes limited capacity at the airport.
Since the beginning of the month, Spanish Volotea has cut almost 1% of flights from its summer schedule.
