No, the Iran War won’t ground your European holiday flight |
No, the Iran War won’t ground your European holiday flight
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My family-and-friends WhatsApp chat tracks the ups and downs of commodity markets. Whether it’s when to switch utility provider or purchase olive oil, I’m everyone’s in-house analyst.
Unsurprisingly, the question du jour is whether the US-Iran war will ground European summer holiday flights. For now, the answer is no.
Advising family and friends has no upside — and lots of downside. Thus, I have caveated my messages with the usual disclaimer: the US-Iran ceasefire may collapse and the war restart. But barring a worst-case scenario, the invisible hand of the market is already doing enough to keep most planes flying.
From a pre-war level of about $US100 ($140) a barrel, wholesale jet fuel prices in the northwest European and Asian markets shot up to a record high of over $US230 a barrel in early April. Since then, they’ve fallen 30 per cent to about $US165 a barrel.
Cathay Pacific Airways, one of the largest carriers in Asia, recently said it would cut jet fuel surcharges in response to dropping wholesale prices.
European airlines, which also panicked initially, are sounding more confident. “Let me be clear on fuel availability: We are not currently seeing jet fuel interruptions, and we do not expect supply issues this summer,” Luis Gallego, chief executive officer of British Airways owner IAG, told reporters earlier this month.
Barring a worst-case scenario, the invisible hand of the market is already doing enough to keep most planes flying.
Tickets, for sure, would be more expensive; the odd disruption may occur, too. And not every route faces the same risk.
Netherlands to Greece? That’s fine, with both countries net jet fuel exporters. Poland to Portugal? That’s low risk, too. Austria to Spain? It........