Since the Straight of Hormuz was closed during the Iran War, the price of jet fuel has doubled. As a consequence, many airlines have cancelled flights. Regional airports are feeling the most strain
The Iran War has put huge strain on the aviation industry(Image: All copyrights belong to Jingying Zhao via Getty Images)
Europe’s smaller airports face an “existential threat”, according to the boss of the Airports Council of Europe.
Olivier Jankovec, the director general of ACI Europe, has warned that some of the continent’s smaller airports may not survive if jet fuel shortages triggered by the Middle East crisis lead to widespread route cancellations.
Since the Straight of Hormuz was closed during the Iran War, the price of jet fuel has doubled. As a consequence, many airlines have cancelled flights.
Regional airports are most exposed to airlines cutting capacity and raising fares, as demand on their routes is generally more price-sensitive than with bigger airports. This comes in the wake of the coronavirus pandemic, which has left some regional airports 30% below 2019 levels, according to Mr Jankovec.
“The current levels of jet fuel prices and the prospect of a new cost of living crisis mean that many regional airports across our continent are likely to face both a supply and demand shock. For them, this is nothing short of an existential threat,” the aviation boss told the Guardian.
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Conversely, the biggest airports in Europe have a different problem.
Heathrow, the UK’s busiest airport, delivered a stark warning about its capacity on Wednesday, as conflict in the Middle East triggered a surge in demand for connecting flights.
“Heathrow is full”, declared its chief financial officer, Sally Ding. Her comments came alongside the publication of first-quarter figures showing 18.9 million passengers passed through the airport in the opening three months of the year. That represents a 3.7% increase year-on-year.
Airspace closures stemming from the conflict in Iran led to a rise in transfer passengers. This pattern is expected to persist as geopolitical uncertainty continues, impacting one of the UK airport’s chief international competitors for worldwide connections, Dubai.
Heathrow’s trading update noted it had “temporarily absorbed demand from elsewhere”. It also warned “passenger numbers for the rest of the year are likely to be impacted whilst there is significant uncertainty in the Middle East”, as reported by City AM.
Yet as the long-running domestic saga surrounding planning permission for a third runway continues, Ding warned that Heathrow’s operating capacity meant “fewer choices and higher fares for passengers and missed opportunities for the UK economy”.
Heathrow’s £50bn proposal to increase capacity has been mired in political wrangling for years. Its blueprint for a new, 3.5-kilometre runway would elevate passenger capacity to 150m annually from 84m. With it, the airport could accommodate 756,000 flights per year, up from 480,000 currently.
“Our plan is privately financed, rigorously assessed and focused on value. With the right regulatory framework and government policy in place, we are ready to invest, grow and keep the UK connected to the world,” a statement from Heathrow said on Wednesday.
The project involves redesigning part of the M25, London’s ring road which passes close to Heathrow, by diverting it into a tunnel. For the first time in Heathrow’s history, the government examined a competing expansion proposal from another firm.
The more economical bid – costing £25bn, and put forward by the Arora Group, which runs hotels and is involved in property asset management as well as construction – would have avoided the M25 altogether. It was turned down last autumn by Transport Secretary Heidi Alexander. She selected Heathrow’s proposal, but it has faced further delays following a government decision to reassess its overarching strategy in its Airports National Policy Statement, now anticipated this summer.
