Air travel is on course for a rocky summer. In recent weeks, Lufthansa Group axed 20,000 flights from its summer schedule, announced the retirement of its most gas-guzzling aircrafts, grounded an entire subsidiary airline and slashed spending budgets. The company cited the Iran conflict, rising jet fuel costs and labour disputes for the cuts. The question is whether this is a brief change or an acceleration towards alternatives for the sector.
Few things sharpen the focus of executives like war. After the conflict in Iran began in late February, it took little time for the price of jet fuel to double. Fuel is a significant part of an airline’s operating expenses and large spikes in its cost can have outsized effects. Passing on those increases to passengers can lead to a drop in demand, so some major airlines have leaned on cutting services rather than significantly raising the price of tickets. According to Newsweek, more than 150,000 international flights have been cancelled from March through to June.
The short-term effects of the conflict have placed the sector in limbo. As ceasefire talks between the US, Israel and Iran continue, airlines don’t yet know how the future price or supply of fuel will be affected. Some experts have warned of major disruptions to summer air travel, especially in Europe, which is heavily dependent on Gulf supply. Others aren’t as concerned: while speaking to reporters in London, Wizz Air CEO József Váradi said that he doesn’t expect Europe to have any issues, in part because it can simply buy more jet fuel from the US.
For now, it’s still business as usual in most places, with minor fare hikes and relatively few cancellations. In Asia, however, impacts of the shortage are being felt, with some companies tankering fuel to certain destinations. Despite this, new aircraft are still being ordered, most planes are departing and travellers continue to buy tickets.
The past few months have reminded the industry of its vulnerability. For years, airlines and manufacturers have worked towards reducing their reliance on oil but most changes have been incremental and efficiency gains have largely relied on technological improvements. Advanced engines on the latest generation of aircraft can cut fuel usage by about 15 per cent but the number still adds up across an entire fleet. It is safe to assume, however, that today’s geopolitical climate might speed the search for oil alternatives.
Electric airplanes
While electric- and hydrogen-powered concepts have been in development in recent years, progress has been slow. Most aircraft in the category are designed for short flights with few passengers. In March, however, Airbus officially greenlit plans to build a 100-seat, electric, hydrogen-powered regional airplane, which will enter service in the 2040s. Though this doesn’t provide an immediate solution, the rate of development and new entrants to the field will increase as long as fuel prices stay high.
Energy from cooking oil
Even before the conflict, the industry was beginning to incorporate sustainable aviation fuel (SAF) into operations. Made from cooking oil and municipal solid waste, the fuel reduces overall CO2 emissions up to 80 per cent; it also eliminates the sector’s reliance on oil producers.
SAF is still more expensive than traditional jet fuel but there are a number of ongoing initiatives to lower its cost and to produce it at the scale required for the industry – and this geopolitical moment could be a tipping point. The European Commission recently announced that it will be accelerating SAF and synthetic-energy development. As the price gap between traditional and alternative jet fuel narrows, it’s likely that airline executives will begin to opt for the latter.
There will, no doubt, be more turbulent moments to come for the aviation industry. But the pinch on oil supplies will probably push airlines to create initiatives to reduce fuel burn and boost development of zero-emission aircraft. Perhaps there’s no better way to weather a storm than to go through it.
Gabriel Leigh is Monocle’s transport correspondent. For more opinion, analysis and insight, subscribe to Monocle today.
