RYANAIR boss Michael O’Leary has warned jet fuel supplies could be disrupted in May as the war in Iran chokes off global oil routes.
The budget airline kingpin warned that holidaymakers could face a summer of uncertainty if the Middle East war continues to throttle global oil routes.
Prices have spiralled since the outbreak of fighting at the end of February, with Iran blocking vital tankers from passing through the Strait of Hormuz.
Speaking to Sky News, the airline chief revealed that while Ryanair is “reasonably well hedged” on 80% of its fuel, the company is being forced to shell out nearly double for the remaining 20%.
O’Leary confirmed the airline is paying around $150 a barrel for the unhedged portion of its supplies.
The outspoken boss warned that while rising costs are a major headache, the more “immediate concern” is whether there will be enough fuel to keep planes in the sky.
He admitted that the industry is at the mercy of the conflict and the ongoing blockade of the world’s most important shipping passage.
“Fuel suppliers are constantly looking at the market. We don’t expect any disruption until early May, but if the war continues, we do run the risk of supply disruptions in Europe in May and June, and we hope the war will finish sooner than that and the risk to supply will be eliminated,” he said.
O’Leary calculated that the threat to the airline’s operations is now a very real possibility for millions of passengers planning their early summer getaways.
He warned that there is a “reasonable risk” that between 10% and 25% of supplies could be at risk through May and June, adding that like everyone else in the industry, he hopes the war ends sooner rather than later.
The Ryanair chief made it clear that the fate of the summer season rests on the reopening of the Strait of Hormuz.
He stated that if the war finishes by April and the shipping lane reopens, then there is “almost no risk to supply.”
Despite the looming threat of shortages, O’Leary struck a defiant tone regarding his own flight schedule.
He told Sky News that he does not expect to cancel any flights, even as some of Ryanair’s rivals struggle to cope with the volatile market.
However, the pressure on the industry is mounting across the board.
EasyJet boss Kenton Jarvis has already sounded the alarm for passengers’ wallets, warning that European consumers should expect higher ticket prices towards the end of summer when existing fuel hedges come to an end.
So far, a number of airlines have already said they will be raising the cost of flights due to the fuel crisis.
Cathay Pacific, AirAsia and Thai Airways are just some that are increasing fares, along with Air New Zealand.
United Airlines said it could eventually see fares increase as much as 20 per cent.
Other airlines have said they are cancelling flights altogether.
United Airlines confirmed that it would be cutting five per cent of flights for the next few months, which works out to around 250 a month.
Air New Zealand has cancelled 1,100 fights, affecting 44,000 passengers, while Scandinavian airline SAS also cancelled 1,000 flights.