Oil tankers may still be stuck in the Strait of Hormuz, but airlines continue operating, ignoring warnings of an impending fuel shortage. This was reported by Qazaqyia.kz citing The Guardian.
The decision to hold the Iata AGM in Rio de Janeiro may signal a revival of the aviation industry, especially after the event was canceled during the Covid years and then held online. Rio was announced as the host city at the previous summit in Delhi, where Indian Prime Minister Narendra Modi spoke, emphasizing the importance of aviation. At that time, global air traffic had recovered, and jet fuel cost about $80 per barrel. Now it exceeds $140.
According to aviation analysts Cirium, in 2025 jet fuel accounted for just over a quarter of global airlines' expenses – and each dollar per barrel adds about $3 billion to the annual fuel bill. Over the past month, about 6% of available seats have been removed from schedules worldwide due to high costs and uncertain demand.
European carriers, initially considered the most vulnerable, are mostly continuing to fly full schedules, given the upcoming profitable season. New sources of kerosene have been found in the US and West Africa, and supply chains have responded to the jet fuel premium.
On Friday, EU Transport Commissioner Apostolos Tzitzikostas further allayed fears. "There is currently no jet fuel shortage in Europe. We have no signs that a shortage will arise in the near future," he told Reuters.
Many large carriers hedge most of their fuel supplies, protecting them from price shocks. But no analyst can confidently predict airline costs and how much passengers are willing to pay amid a protracted war. EasyJet CEO Kenton Jarvis recently admitted that their airline suspended hedging due to fuel price volatility, which he said "jumps depending on what Donald Trump had for breakfast."
The current storyline in the industry is who can absorb EasyJet, whose falling share price has attracted a takeover bid from US private investment firm Castlelake, possibly jointly with another European airline. EasyJet is not part of the Iata world, which mainly consists of traditional airlines, national carriers, and long-haul operators whose fares may be more elastic than those of airlines built on a low-cost short-haul model. But others may also be absorbed or find themselves in a worse position.
The war between the US, Israel, and Iran has affected some of the world's largest players: Gulf carriers, whose geography, deep pockets, and rapid growth have changed how and where intercontinental travel is conducted. Industry observers are closely watching their reaction, given that operations in the Middle East were completely halted when the war began in late February, hub airports were attacked by drones, and airspace was closed. Emirates, Iata's host airline in Dubai in 2024 and one of the most influential players, will be an unusually quiet presence in Rio, with its CEO absent.
Discussions about the industry's environmental impact will likely play an even smaller role in airlines' thinking this year – although, as always, those in accounting are interested in reducing fuel costs per passenger. The last prolonged oil price change in the 2000s helped stimulate orders for new, more efficient aircraft. But the number of flights is growing faster than efficiency, relentlessly increasing aviation's carbon footprint.
Sustainable aviation fuel (SAF) remains on the conference agenda, though perhaps with waning faith from supporters. Iata CEO Willie Walsh, who pushed Iata members to commit to SAF as the only viable solution, has since lashed out at governments for introducing mandates while production has failed. The former head of British Airways announced his departure from Iata, a post he has held since 2020, and is set to become head of fast-growing Indian low-cost carrier Indigo – an airline that just canceled its direct Delhi-Manchester flight due to high fuel prices. Iata has not yet confirmed whether a successor will be announced in Rio or presented next year. But after months of new crisis, many of its airlines still believe they will have a next year.