Trade's focus shifts to fuel and fares as war enters second month

The trade faces growing challenges as the war in the Middle East enters a second month, with airfares rising, fuel surcharges on some flights, fears of jet fuel shortages, and continuing cancellations to the Gulf states and beyond.

 

Advantage Travel Partnership chief executive Julia Lo Bue-Said noted international carriers have already imposed surcharges, saying: “The longer this goes on, the more there are going to be challenges on jet fuel, not just price but availability.”

 

She said: “There are so many different challenges. The only positive is that Americans aren’t travelling, which is creating availability.”

 

Operators may pass on surcharges of up to 8% of a package price so long as they reserve the right to do so in their booking conditions. However, industry consultant Andy Cooper, former head of the Federation of Tour Operators, suggested: “There will be very few who want to surcharge.”

 

More: Rising cost of living due to war dampens tourism outlook

 

He noted most airlines in Europe will have fuel hedging in place but said: “It could become difficult later. One of the difficulties is that not all oil can be refined into jet fuel.”

 

Carriers already surcharging for fuel include Air India, Cathay Pacific, Korean Air and Air Transat, with Air Mauritius imposing a £60 surcharge on all return fares from April 1, and £80 in economy and £200 in business from April 30.

 

US carrier JetBlue has raised its baggage fees instead, saying it allowed for “more competitive fares”.

 

Association of Atol Companies advisor Alan Bowen warned African based carriers “could be first to run out of fuel [as] most of Africa’s jet fuel comes through the Strait of Hormuz”.

 

However, he said: “The concern here is rising airfares. The longer this goes on, the more it will become an issue. All airlines are going to have to pay more [for fuel].”

 

Bowen described the market as “subdued”, while Lo Bue-Said reported “a softening” but said: “People are still travelling and the western Med is seeing a spike in demand. We’re not seeing significant cancellations, which is positive.”

 

However, Blue Bay Travel reported cancelling and rebooking or refunding clients up to the end of May. Chief executive Alistair Rowland said: “We’re taking a proactive stance.”

 

Despite fearing “flight refunds are going to take forever”, he argued: “It gives more chance to rebook although the issue then is price.”

 

Trade marketing association Tipto surveyed 100 frontline agents on behalf of Travel Weekly this week, finding 60% reported sales down on this time last year.

 

On Tuesday, Iata cut its global airline passenger capacity projections and reduced its March expectations from 5% to 3.3% while releasing heightened demand figures for February.

 

Iata warned that it was “impossible” to quantify the full impact of the conflict on the Middle East amid a sharp hike in fuel prices.

 

The outlook on the war remained as confused as ever with US President Trump threatening one minute to “obliterate” Iranian energy infrastructure and “take the oil in Iran” by seizing its main oil supply base and the next telling US allies to “go get your own oil”.

 

Some reports suggested Trump is willing to pull out without restoring access to the Gulf States’ oil via the Strait of Hormuz.