IEA chief Fatih Birol says disruptions in the Strait of Hormuz have effectively halted shipments that feed Europe's jet-fuel supply. Airlines across Europe are trimming schedules and raising fares as the squeeze threatens the summer travel season, industry officials and the IEA warn.

Supply chokepoints and where fuel normally comes from

Fatih Birol, head of the International Energy Agency, told audiences at a conference the situation in the Strait of Hormuz has effectively stopped shipments from key Middle East refineries that normally feed Europe. His comments underline how concentrated Europe's import routes have been.

  • Analysts offer different estimates of Europe’s exposure to shipments through the strait.
  • Some countries keep several months of jet fuel on hand, according to an IEA report released this month, but inventories vary by nation and by airport.
  • Major hubs tend to have larger fuel farms; secondary and tertiary airports often do not, making them more vulnerable to shortages.

"Fuel shortages would start at secondary and tertiary airports that don't have fuel farms while the major hubs would be insulated for a bit longer," said Mike Stengel, principal at the aerospace consultancy AeroDynamic Advisory.

Prices soared and margins vanished

Jet fuel prices have risen since the disruption began, and refining margins for converting crude into jet fuel widened. Airlines operate on thin margins — often single digits — so rising fuel costs can quickly push carriers toward operating losses unless fares adjust.

Industry figures say some cost increases are already being passed to passengers through higher fares, fuel surcharges and extra fees for baggage and ancillary services.

Immediate airline reactions and route cuts

  • Some carriers have announced schedule reductions: Lufthansa cut short-haul flights in its spring and summer schedule, and SAS said it would cancel a large number of flights in April as it deals with higher fuel costs.
  • Airlines typically respond to sharp fuel-cost increases by raising fares, cutting capacity, or both — moves that can depress demand if prices climb too far.
  • Smaller operators and low-cost carriers that rely on short sectors are especially exposed, since those routes often operate from airports with limited fuel storage and use a disproportionate share of short-haul fleets.

Bernstein's Alex Irving, head of European Transport Equity Research, said higher ticket prices will likely be required for the industry to remain profitable, though those increases risk further reducing demand.

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Some carriers, including Lufthansa and SAS, have already cut short-haul routes and canceled flights.

This article was created with AI assistance.