Jet fuel crisis worse than Covid for airlines, says AirAsia chief
The global jet fuel shortage caused by the Iran war has caused a bigger crisis for airlines than the Covid-19 pandemic, the chief of AirAsia has warned.
Tony Fernandes, chief executive of AirAsia, said: “I thought I’d seen it all with Covid […] but having seen jet fuel go up almost three times — this is much worse.”
Jet fuel supplies have fallen to their lowest level since records began as the Iran war wreaks havoc on fuel shipping lanes.
“You wake up one day and your major cost has tripled — it was quite a new experience for me and I’ve been through a lot in my life,” Fernandes told the Financial Times.
This comes as US budget airline Spirit collapsed earlier this week, with Fernandes warning that other low-cost operators could follow suit.
‘Gulf capacity taken out’
But the airline boss said Asian operators are seeing a boost from the conflict: “The most important thing is that demand has not dropped in Asia.
“If anything, geopolitics is causing more Asians to stay in our part of the world as opposed to venturing outside.
“The Gulf capacity has been taken out and there is a massive increase in price to Europe, which has driven more traffic to our side.”
AirAsia has sold 50,000 tickets for flights to Kuala Lumpur to London via Bahrain in June.
Fernandes said the airline said it is no longer promoting these flights but is committed to its use of Bahrain as a stop-off hub.
“Unless there’s another war, Bahrain still is very much in our plans, and we’re very committed to it,” he said.
UK ‘most exposed’ to fuel shortage
As many as two million seats have been lost due to the cancellation of 13,000 flights in May as a result of the conflict, it emerged earlier this week.
Airports in Istanbul, Turkey, and Munich, Germany, have seen the steepest drop-off in air traffic.
German airline Lufthansa has cut 20,000 short-haul flights, and Irish firm Aer Lingus has pulled hundreds of trips from its summer schedule.
The UK economy is the most “structurally exposed” to jet fuel shortages, according to researchers at Allianz Trade.
Transport secretary Heidi Alexander has loosened “use it or lose it” rules in a bid to soften the pressures facing airlines, and is talking up staycations in a bid to manage expectations if Brits see their summer holidays cancelled.
The “use it or lose it” rules dictate that airlines’ slots at airports must be in use for a certain amount of time to retain their right to use the space.