Flights in Europe cancelled. We're moving out of fuel

The cancelled flights, the rising ticket prices and the bankruptcy of a large carrier are only the beginning of the problems facing the aviation manufacture today. Air fuel shortage is increasingly hitting passenger lines, cargo transport and travel agencies. If the situation in the Persian Gulf does not improve, the effects can be felt not only by tourists planning a holiday, but besides by companies dependent on efficient supply chains.

Cancelled flights and the bankruptcy of Spirit Airlines. The aviation manufacture has a increasing problem

The situation with the shortage of aviation fuel is becoming increasingly serious. Lufthansa has already canceled 20,000 flights. Air France increased its economy class ticket prices by EUR 50 per return flight and the Dutch airlines KLM suspended more than 160 flights. At the same time, the global Energy Agency acknowledged that Europe has only six weeks of air fuel supplies. However, the problem already concerns manufacture from around the world. On the graphics below, we see differences in flight schedules and number of seats. Importantly, these are data that survey only 11 days.

Source: Financial Times

We see that all major airlines are presently making massive cuts, and in peculiar Turkish Airlines, which have given up almost 20 routes. However, there is besides a carrier who simply did not deal with the situation. It's about a US company called Spirit Airlines, which declared bankruptcy a fewer days ago.

Although for many Poles the name of this carrier means little, it is worth looking at numbers. Last year, the company operated 30 million passengers and made more than 300 000 flights, with its share of the US airline marketplace as much as 3.5%.

So it's not just any airline, it's a national giant with over 17,000 employees. Interestingly, Donald Trump announced a peculiar offer worth $500 million to save the company from bankruptcy. Eventually, however, the talks failed.

More costly tickets, cargo and hazard of supply disruption

It all points to the fact that the crisis in the aviation manufacture is just getting worse. To realize why, let's look at the graphics below.

Source: Kraków Airport Aviation Education Centre (CEL)

If we break down the costs of a typical passenger flight into basic categories, we will see that airlines are highly dependent on aviation fuel prices. On average, it is as much as 30% of the full cost.

And that's why ]]>Europe is in a peculiarly hard situation]]>. due to the fact that as much as 70% of oil, which is then refined to Jet A-1 aviation fuel, comes from the Gulf region. These are mainly Kuwait and Saudi Arabia, but besides the United arabian Emirates and Qatar. This makes the situation very dangerous due to the fact that the further blockade of the Strait Ormuz will increase these problems all day.

In addition, it is worth remembering that the availability of aviation fuel affects not only passenger traffic, but besides cargo transport, which in practice is the fastest affected by any disturbances. due to the fact that unlike passenger transport, where any of the costs can be gradually passed on to customers, in cargo any change in the price of fuel almost immediately translates into the rates for the carriage of each kilogram of cargo.

As a result, any routes can be reduced – especially those where the usage of cargo space falls below 65%. The airline will then focus on transporting critical loads specified as medicines or semiconductors, while little urgent goods specified as clothing or consumer electronics will be transferred to maritime and rail transport.

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Author: ]]>Mateusz Szczik]]>