BRITISH Airways passengers face higher fares after its parent company warned rising oil prices will add about £1.72billion to its fuel bill this year.
International Airlines Group (IAG), which also owns Iberia and Aer Lingus, said it expects to pass on part of the extra cost through ticket prices, with business class and other premium long-haul passengers among those most likely to be affected.
Chief executive Luis Gallego said airlines need to increase fares to help offset fuel costs, which make up about a quarter of their spending.
The rise follows disruption linked to the Middle East conflict and the closure of the Strait of Hormuz, which normally carries about a fifth of the world’s oil and gas shipments.
IAG warned the crisis could deepen if the strait remains blocked, with global jet fuel supplies potentially restricted.
However, the group said it does not expect any disruption to summer fuel supplies.
Mr Gallego said there is less jet fuel coming from the Middle East, but there are “other places with record supply” such as the US.
He said IAG has been “planning for situations like this for many years”, and has invested in its own jet fuel supply at its “main hubs”.
The company recorded a pre-tax profit of £365million during the three months to the end of March.
That was a 76.6% increase from £207million a year earlier.
The group now expects its annual fuel bill to reach £7.78billion.
Mr Gallego attributed the firm’s “strong first quarter” to “continued strong demand for our networks and airline brands”.
He added: “IAG is uniquely positioned to navigate the current headwinds created by the Middle East conflict thanks to our leading positions across diverse markets, strong brands, structurally high margins and strong balance sheet, as well as a strong track record of execution.”
IAG said about 3% of its capacity was “exposed to the Gulf region” at the start of the war on February 28, mostly with British Airways flights.
A large part of this has been redeployed, including boosting capacity at destinations where there are now fewer flights by Middle East carriers such as Bangkok, Singapore and the Maldives.
British Airways has also announced additional flights this summer on routes with higher demand for direct flights, such as India and Nairobi.