Passengers face soaring air fares ‘just like after 9/11’ due to Iran war, global aviation chief warns
Air fares are soaring as the crisis engulfing airlines sparked by the Iran war is ‘akin to post-9/11’, a global aviation chief said yesterday.
Speaking at an industry summit in Brussels, former BA boss Willie Walsh said tickets on US-UK transatlantic flights would be the worst and quickest hit.
He said the crisis facing the industry was not as big as during the Covid-19 pandemic, when travel was largely grounded, but added: ‘It’s more akin to the post-9/11 transatlantic issues.’
After America suffered its worst terror attack, demand for transatlantic flights plummeted and took several months to bounce back.
Mr Walsh said that, unlike UK airlines, US carriers do not buy as much jet fuel in bulk, meaning soaring costs sparked by the conflict are being passed onto passengers almost immediately.
Now boss of global industry body The International Air Transport Association, he added: ‘The US carriers have to put prices up, which means the [non-US] competitors at the other end will match the price increase because that’s the nature of the industry.
‘But it’s not just transatlantic prices that will rise, its prices everywhere. They’re already doing it, they’re putting prices up.’
Former BA boss Willie Walsh said crisis sparked by Iran war is ‘akin to the post-9/11 transatlantic issues’ at industry summit in Brussels
He said he believed airlines would be more likely to hike prices than cancel flights to recoup costs, adding: ‘I don’t think they’ll reduce capacity.
‘I think what will be done in the short-term is they’ll try and adjust the pricing so as to continue flying without running the risk of getting into debt. It’s a challenge.’
He said that while bookings were holding up, travellers are opting more for Western and Southern Europe and North Africa rather than eastern European destinations such as Cyprus or Turkey, which are closer to the conflict.
Whether or not airlines face having to cancel flights or increase fares can depend on how well ‘hedged’ they are.
This refers to how much fuel they bought in bulk at a certain price. Some airlines bought months’ worth of fuel before the conflict when oil prices were as cheap as $67 a barrel.
But as these stocks start dwindling, airlines face having to pass on higher costs or consider cancellations.
Several UK airlines are known to be well hedged, meaning steep fare rises for short-haul carriers like easyJet and Ryanair are likely to take longer to filter through.
However, if the Iran conflict drags on for several months, fares will almost certainly be hiked by the summer across most airlines.
The price of jet fuel in Europe soared to a record high this week – almost double what it was before the conflict started.
And there are fears of shortages if Iran’s retaliatory blockade of the Strait of Hormuz continues to squeeze Western oil supplies.
Ministers are drawing up plans for dealing with jet fuel shortages in the event the war drags on for months and months, according to Government sources.
If this transpires, ministers are expecting supply to be ‘constrained’, putting getaways at risk if airlines are asked to ration fuel.
Scandinavia’s largest airline – SAS – this week became the first major carrier in Europe to scrap flights because of surging fuel prices triggered by the Iran war.
On Tuesday it said it was scaling back flights because of the ‘sharp and sudden increase’ in jet fuel costs.
Air France-KLM and SAS have already said they will have to hike ticket prices due to the rising cost of jet fuel, while Finnair has warned that jet fuel supplies may run out due to the effective closure of the Strait of Hormuz.
There are fears that more airlines across Europe and in the UK will be forced to do the same if the conflict drags on.
A Department for Transport spokesman said: ‘We are engaging with British carriers to support their operations against the backdrop of war in the Middle East, and to limit the impact on industry.’
