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Airlines will have to spend an extra $100bn on jet fuel this year, with fares “inevitably” rising to cover the bill after the war with Iran choked off oil supplies.
With jet fuel prices expected to be 70% higher across 2026, airlines body Iata said that collective industry profits worldwide would halve to $23bn. Some carriers would struggle to survive the fuel price shock caused by the closure of strait of Hormuz in March, it said.
“High oil prices which will inevitably mean higher ticket prices,” said Willie Walsh, Iata’s director general. “There’s just no way to avoid that.”
Walsh said that industry polling showed passengers were now braced for higher fares and prepared to spend more, but added: “The big unknown is how long travellers and shippers can tolerate the higher costs of connectivity.”
Speaking at Iata’s summit in Rio de Janeiro, Walsh said it was a “challenging and unpredictable time”, with “wafer-thin margins”.
“It’s going to be very challenging and for a lot of airlines the increase in the fuel bill is potentially existential.”
But Walsh said that concerns about possible fuel shortages were now over, despite the soaring costs, and that compared with Covid it was not a crisis.
“You’re looking at an industry that is still profitable and still forecasting growth,” said Walsh. “Traffic is up 2%. If you factor out the impact on the Middle East for the rest of the world it remains a pretty positive environment.”
Long-haul and business passengers may face the bulk of the fare increases, according to the chief executive of British Airways. Speaking on the fringes of the conference, Sean Doyle said there would be “no getting away from it – if fuel goes up, fares have to go up.”
However, Doyle suggested that more price-sensitive short-haul holiday flights would be the last to increase: “A brand like BA, which has got a lot of long haul, a lot of corporate, a lot of premium; we’d expect maybe to have more pass-through of prices than maybe a carrier who’s solely competing for leisure short haul.”
According to research from Iata, around half of passengers were prepared to spend substantially more on fares should they track the price of oil, which Walsh said “bodes well” for a strong northern summer season for the industry.
More British and European travellers will be flying within the continent than usual, industry data showed, with fewer venturing farther afield given the continued uncertainty around the Gulf hubs.
But Iata warned that the EU’s entry-exit system (EES) could still create difficulties for those travellers, this summer and beyond. The airlines body called on Europe to rewrite legislation to ensure that flexibility to pause the border controls could continue, beyond the current absolute deadline of 7 September for the full and final introduction of biometric checks on all applicable travellers.
Rafael Schvartsman, Iata’s vice-president Europe, said: “I think Europe needs to be much more honest [about] where we are.”
Under the new system, most non-EU citizens will be fingerprinted and photographed by border staff, with details uploaded to a central database.
Schvartsman said: “Normally, we would process a passenger in 20 to 25 seconds, and you’re already stipulating that it will take 90 seconds, and on top of that you have unreliability of the systems, the probability that people will be waiting in lines for a long time is very, very high.”
Travellers to the EU face potential long waits at passport control under the new system, he added: “For most of the Mediterranean, the British are the No 1 incoming tourist – that is a major concern.”
Greece has already unilaterally announced it will not carry out EES checks on UK nationals. But Schvartsman said it was an issue for many airports and could not be resolved by exempting one nationality: “We also have high demand for American carriers already putting extra flights to European destinations during the summer. You will have an influx of US citizens too.”
