Lufthansa Airbus A340 passenger aircraft as seen landing at Eindhoven Airport EIN during a rare charter flight, arriving from Athens, Greece.
Nicholas Economou | Nurphoto | Getty Images
Europe’s airport industry has warned that jet fuel shortages could hit within three weeks, disrupting summer travel and “significantly” harming the European economy.
ACI Europe, which represents airports across the European Union, said on Thursday that a supply crunch would derail airport operations and air connectivity.
In a letter to the EU Commissioner for Sustainable Transport and Tourism Apostolos Tzitzikostas, shared with CNBC, the industry body warned of the “harsh economic impacts” fuel shortages would have on the European economy.
“At this stage, we understand that if the passage through the Strait of Hormuz does not resume in any significant and stable way within the next three weeks, systemic jet fuel shortage is set to become a reality for the EU,” the letter said.
ACI Europe said potential shortages are particularly worrisome ahead of the “peak summer season”, when many EU member states rely on the economic boost from increased air travel. Air connectivity generates 851 billion euros (nearly $1 trillion) in GDP for European economies and supports 14 million jobs, according to the group.
“As a result, it is essential that the EU prioritizes the availability and stable supply of jet fuel as part of its response to the oil and energy crisis triggered by the conflict in the Middle East,” it added.
The U.S. and Israel’s war with Iran, which began on February 28, brought traffic through the Strait of Hormuz to an effective halt, sending oil prices above $100 a barrel and pushing energy costs higher.
Airlines were immediately impacted by soaring jet fuel prices, up 103% month-on-month as of March, according to the International Air Transport Association.
The price of jet fuel in the U.S. roughly doubled, increasing from $2.50 a gallon on Feb. 27 to $4.88 a gallon on April 2.
The U.S. reached a two-week ceasefire agreement with Iran on Tuesday in exchange for Tehran allowing vessels to pass through the Strait of Hormuz, but the vital passageway remains effectively closed. Around 20% of the world’s oil passed through the Strait before the war started.
U.S. West Texas Intermediate crude was last up 0.4% to $98.27 per barrel after passing $100 earlier in the session, while Brent crude was nearly flat at $96.02 per barrel.
Airlines are implementing several measures to address rising jet fuel costs. Lufthansa’s CEO Carsten Spohr told employees last week that the German carrier is forming teams to create contingency plans due to the Middle East war. This could include grounding some of its aircraft.
Scandinavian airline SAS is cancelling 1,000 flights in April, while Ryanair’s CEO Michael O’Leary said the Irish carrier would have to look at cancelling some flights and reducing capacity over the summer if the fuel shortage continues.