Global tensions in energy markets are already affecting the aviation industry – fuel prices are rising, flights are being cut, and tickets are becoming more expensive. At the same time, it is premature to talk about the definitive end of the era of cheap flights. Viktor Halchynskyi, former spokesperson for NAC "Naftogaz of Ukraine" in Lviv region, told UNN about this in a comment.
Why aviation fuel has become the most vulnerable
Unlike gasoline or diesel, aviation fuel has much stricter quality requirements and a more complex production process. This makes it more dependent on global risks and restrictions in the oil market.
Aviation fuel is a product with increased quality requirements. It must be produced from the purest grades of oil. It's not just automotive fuel. In addition, much more of it is used – to get an airplane into the air, significantly larger volumes are needed than for ground transport.
He added that there are few manufacturers of such fuel, and reserves are formed more difficultly than in the automotive fuel segment.
This is a niche market with a limited number of manufacturers. And, importantly, sufficient reserves have not been created, as is done for gasoline or diesel. Therefore, some suppliers are even experiencing a physical shortage of fuel now.
Airlines are already changing their behavior
The rising cost of fuel is already affecting the operations of air carriers. Some companies are forced to cut flights or change the economics of transportation.
Airlines can no longer afford to operate flights with low load factors. Sometimes it's cheaper to offer passengers compensation or a hotel than to operate an unprofitable flight. This is a direct consequence of rising fuel prices.
According to him, this also affects the final cost of tickets, which passengers are already feeling.
Will cheap flights disappear?
Despite the current price increase, the expert does not believe that cheap flights will disappear completely. However, they may change their format.
I think a rollback is possible. Everything depends on the price of oil. Currently, it is rising due to deficit risks, particularly due to the situation in the Persian Gulf. But even a partial reduction in tension already affects prices.
At the same time, the low-cost model may transform.
Cheap tickets will not disappear, but the approach will change. Low-cost airlines already made money on additional services – baggage, seat selection, hand luggage. This trend will only intensify. Perhaps there won't be tickets for 5 euros, but affordable flights will remain.
What will happen next with prices?
The key factor for market stabilization remains the security situation in the Middle East and access to resources.
If the situation around the Strait of Hormuz stabilizes, the market will gradually stabilize. But the industry must draw conclusions – review approaches to reserves and contracting.
He emphasized that the current price increase is temporary but may drag on if geopolitical risks persist.
Are there risks for Ukraine?
Regarding Ukraine, the expert does not see critical threats to fuel supply, even in wartime conditions.
Ukraine has been able to form gasoline and diesel reserves, contracts have been concluded. The problem may be in the price, but not in the physical availability of fuel. I hope that a similar approach will be applied to aviation fuel for military needs.
Thus, the current crisis in the aviation fuel market is already changing global aviation, but it is still premature to talk about the definitive end of cheap flights.