European Airlines Face Fuel Shortage Risk due to Iran War
LONDON, April 29 (Reuters) – European airlines are facing their biggest challenge since the COVID-19 pandemic as the war in Iran drives up kerosene prices and disrupts travel in the Middle East, casting a shadow over the summer holiday season.
So far, airlines have largely managed to contain the crisis through hedging operations that have helped control costs – despite an 84% increase in kerosene prices since the conflict began on February 28.
However, they could soon face a kerosene shortage if the war does not end quickly.
“There is a risk of fuel supply rationing, especially in Asia and Europe,” said Willie Walsh, director general of the International Air Transport Association (IATA), to Reuters on Tuesday.
While supply remains strong for now, Walsh noted that the situation is not yet as serious as the disruptions caused by the COVID-19 pandemic in 2020, which led to a drop in travel demand and losses of several hundred billion dollars for the aviation sector.
“I think COVID was of a completely different magnitude,” he said.
“What we are witnessing here is actually a cost problem for airlines. The underlying demand for air transport remains strong, and that’s good news.”
FUEL PRICE HEDGES START TO DEPLETE
Airlines’ stocks have suffered from the Middle East conflict and uncertainties surrounding peace talks and the reopening of the crucial Strait of Hormuz, which is typically a key route for global oil and gas flows, remain.
Airlines are now warning of the depletion of their hedges – which lock in fixed prices – as their outlook worsens with travelers postponing bookings or choosing more local and affordable destinations to avoid potential disruptions.
Swedish Energy Minister Ebba Busch issued an “early warning” on Tuesday about a potential kerosene shortage – despite currently satisfactory supply – urging Swedes to reconsider their travel plans.
Spanish Minister of Industry and Tourism Jordi Hereu advised consumers on Monday to buy their plane tickets as soon as possible to avoid the risk of price increases.
However, Ryanair CEO Michael O’Leary played down concerns about kerosene prices.
“We believe the risk of supply disruption is fading,” he told Reuters, citing conversations with suppliers across Europe early in the week.
Wizz Air CEO Jozsef Varadi stated on Monday that summer reservations were strong.
Despite this, he warned that the end of the conflict would not quickly resolve the issue of high fuel prices.
“Even if the war in Iran ends, I don’t think that will bring fuel prices back to where they were two months ago,” he told reporters in London.
Air France-KLM, IAG, and Lufthansa are expected to report their first-quarter results starting this week. These airlines have all raised prices and reduced transport capacity.
easyJet and TUI have announced a drop in short-term bookings and issued profit warnings in recent weeks.
WINNERS AND LOSERS
Gulf airlines have been the hardest hit.
According to Cirium Ascend data, flights operated by Middle Eastern carriers dropped by 50% year-on-year in March, while bookings for the second and third quarters via major Gulf hubs fell by 42.5%.
However, global passenger transport capacity remains up by over 2% so far in 2026 compared to 2025, indicating overall resilience.
The crisis has impacted margins and widened the gap between weaker and stronger players.
Some have managed to escape the impact. Finnish national carrier Finnair said the crisis had so far had a net positive impact, with increased demand for its flights to Asia. Low-cost carrier Norwegian dismissed risks related to kerosene supply on Tuesday.
George Dimitroff, assessment manager at Cirium Ascend, stated that airlines have adapted and evolved through various crises. He acknowledged that the COVID crisis was “a much harder blow.”
“They (the airlines) are much more agile today than they were over the last decade, let alone the previous two or three decades, where they were rather overwhelmed by this kind of situation,” he said.
(With contributions from Cecile Mantovani, Anne Kauranen, and Gwladys Fouche; French version edited by Etienne Breban, Benoit Van Overstraeten)
by Joanna Plucinska and Alessandro Parodi
