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More than six weeks after international warnings that Europe could run out of jet fuel, at least two major global carriers are telling travellers it is safe to book summer holidays there, saying they do not expect shortages during the busy travel season.
Air Canada is telling customers they should not be concerned about jet fuel. A marketing email seen by CBC News offered discounts to Europe, the Middle East and Africa while stating, in bold text, “there is no fuel shortage affecting our operations, including across Europe, and we do not anticipate any significant impact through the summer.”
European airline Lufthansa wrote in an online post that “most European airlines are confident there will be no jet fuel shortage this summer,” confirming that applied to its own operations as well.
That comes months after the German airline cancelled tens of thousands of short-haul flights through October, saying in April the move would save around 40,000 tonnes of jet fuel.
Ireland-based Ryanair, Europe’s largest airline by passenger numbers, is discounting summer airfares to attract customers. In an investor call in mid-May, CEO Michael O’Leary cited “almost zero concerns” about fuel supplies in Europe.
WATCH | Back in April, warnings of severe fuel shortages:
Europe has ‘maybe 6 weeks’ of jet fuel due to Iran war, IEA chief warns
It’s a big shift from April, when airlines operating in Europe were facing heavy concerns about fuel supplies. The head of the International Energy Agency, Fatih Birol, said at the time there were “maybe six weeks or so [of] jet fuel left,” as oil supplies were blockaded because of the Iran war.
Air Canada ‘going to get their fuel,’ analyst says
Air Canada’s move to reassure customers that it’s safe to book flights to and from Europe surprised one Calgary-based industry expert.
“I have never seen an air carrier come out, particularly at the start of the busiest season, and say, don’t worry about fuel,” said independent aviation analyst Rick Erickson.
However, Erickson said he was fairly confident the Canadian flag carrier is a large enough player that, even through potential shortages, it would be able to take off.
Rick Erickson is an independent airline analyst in Calgary, and he believes Air Canada will get the fuel it needs this summer in Europe. (Anis Heydari/CBC)
“I think they’re going to get their fuel,” he said. “They’re on the A-list, and if the fuel becomes any kind of an issue, the Air Canada planes will get filled first.”
Erickson speculated that Air Canada may have sent the message because it could be noticing a downturn in bookings to Europe.
In a statement emailed to CBC News, Air Canada spokesperson Peter Fitzpatrick said the company is still seeing strong demand for flights to Europe.
“There has been ongoing coverage of this issue [jet fuel] and we wanted to reassure our customers,” Fitzpatrick wrote.
The warnings about a looming flight crisis in Europe came from many industry experts in Canada and abroad, before the impact of reduced airline schedules could be calculated.
“There might have been a doubt or two in our minds, but it was not unreasonable,” said aviation expert Karl Moore.
Moore, a professor at the McGill Desautels Faculty of Management in Montreal, said the current fuel supply situation is not something he recalls seeing before.
The International Energy Agency, after previously warning of a looming supply crisis in Europe, noted in mid-May that demand for jet fuel was dropping as supplies increased, though “rebalancing” to replace Middle East sources with fuel from Africa and the U.S. Gulf Coast will take time.
Oil and fuels have ‘everybody scratching their heads’
Jet fuel prices have been dropping over the past few weeks and months, according to the International Air Transport Association. Other analysts have said alternatives to Middle East-reliant sources of jet fuel have relieved some, but not all, supply problems.
“That is mitigating the potential headlines and concerns of massive cuts and cancellations that we were, perhaps, considering just a month or two ago,” said Matt Smith, director of commodity research for data and analytics firm Kpler.
Smith also said demand for crude oil itself has dropped over concerns about supply blockages at the Strait of Hormuz, helping limit price increases.
Matt Smith, commodities expert with Kpler, points out that market signals around oil and fuel are confusing right now. (CBC)
But that could be sending confusing signals in the market, including lower prices.
“The reality is supplies are dropping every single day here and have been drying up for the last three months…. Everybody is scratching their heads,” he said.
Smith said energy prices should end up much higher than they currently are, whether for jet fuel, diesel or crude oil.
He said if inventories fall further while the Strait of Hormuz remains unreliable, prices could spike.
“When we get there, it’s going to be too late and we really could see prices ripping higher from here,” Smith said.
