Jet2 fuel supply update: Airlines cutting flight prices to holiday hotspots amid spiralling fuel costs due to Middle East conflict
In a bid to stimulate sales, airlines have started cutting prices on flights to holiday hotspots amid the jet fuel crisis.
Ticket prices on flights to some holiday hotspots have been cut as airlines look to increase bookings amid spiralling fuel costs due to the Middle East conflict. Holidaymakers looking to book a trip to the Mediterranean this summer could capitalise on lower fares as firms hope to tackle a potential shortage of jet fuel as the US/Israel-led war in Iran continues.
In a bid to up numbers, fares on some key routes to Spain, Italy and France have fallen by double digits. Some prices have dropped by 10% or more, including to locations such as from Heathrow Airport to Nice, Manchester to Palma, and Gatwick Airport to Barcelona.
The cost of a trip between Milan and Madrid fell by as much as 44%, according to an analysis by the Financial Times, as airlines attempt to stave off a huge slowdown in bookings as travellers fear their trip could be affected by the closure of the Strait of Hormuz.
The analysis, of fares between early April and early May, showed prices fell for more than half of the busiest routes to southern Europe, including holiday hotspots. Travel experts told the FT holidaymakers are “freezing in the headlights”, leaving bookings later due to the uncertainty, or opting for staycations instead.
As a result, airlines are being forced to stimulate demand, lowering fares on a reduced schedule which has seen around two million seats cut globally in May as crisis continues. EasyJet, for example, has pledged not to add fuel surcharges to existing package bookings, while British Airways has promised prices will not rise after holidays are paid for.
This come in contrast to a statement made by International Airlines Group (IAG) chief executive Luis Gallego last week who said all airlines “need to increase fares in order to mitigate the impact” of the increase in the price of fuel, which represents about a quarter of their costs. He said it is “managing the uncertainty” caused by the fuel price increase by “taking the necessary action on yields, costs and capacity”.
IAG shares fell by 4% in early trading on Friday after it said it expects its fuel cost to reach nine billion euros (£7.78 billion) this year, which will affect its full-year profit and free cash flow. Mr Gallego added: “Whilst the impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated, we are confident in our business model and strategy.”
Iran continues to have a stranglehold on tankers passing through the Strait of Hormuz, leading to a surge in oil prices and concerns over jet fuel shortages. Global figures released last week by aviation analytics company Cirium show 13,005 flights planned for May were cancelled between April 10 and April 21, equivalent to 1.5%.