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The Global Fuel Crisis in AviationAirlines will have to spend an extra $100bn on jet fuel this year, with fares "inevitably" rising to cover the bill after the war with Iran choked off oil supplies. With jet fuel prices expected to be 70% higher across 2026, airlines body Iata said that collective industry profits worldwide would halve to $23bn. Some carriers would struggle to survive the fuel price shock caused by the closure of strait of Hormuz in March, it said.Industry Response to Soaring Costs"High oil prices which will inevitably mean higher ticket prices," said Willie Walsh, Iata's director general. "There's just no way to avoid that." Walsh said that industry polling showed passengers were now braced for higher fares and prepared to spend more, but added: "The big unknown is how long travellers and shippers can tolerate the higher costs of connectivity."Financial Impact on AirlinesSpeaking at Iata's summit in Rio de Janeiro, Walsh said it was a "challenging and unpredictable time", with "wafer-thin margins". "It's going to be very challenging and for a lot of airlines the increase in the fuel bill is potentially existential." Walsh said that concerns about possible fuel shortages were now over, despite the soaring costs, and that compared with Covid it was not a crisis. "You're looking at an industry that is still profitable and still forecasting growth," said Walsh. "Traffic is up 2%. If you factor out the impact on the Middle East for the rest of the world it remains a pretty positive environment."Differential Impact on Passenger SegmentsLong-haul and business passengers may face the bulk of the fare increases, according to the chief executive of British Airways. Speaking on the fringes of the conference, Sean Doyle said there would be "no getting away from it – if fuel goes up, fares have to go up." However, Doyle suggested that more price-sensitive short-haul holiday flights would be the last to increase: "A brand like BA, which has got a lot of long haul, a lot of corporate, a lot of premium; we'd expect maybe to have more pass-through of prices than maybe a carrier who's solely competing for leisure short haul."Passenger Behavior and Market ShiftsAccording to research from Iata, around half of passengers were prepared to spend substantially more on fares should they track the price of oil, which Walsh said "bodes well" for a strong northern summer season for the industry. More British and European travellers will be flying within the continent than usual, industry data showed, with fewer venturing farther afield given the continued uncertainty around the Gulf hubs.EU Border Control ConcernsBut Iata warned that the EU's entry-exit system (EES) could still create difficulties for those travellers, this summer and beyond. The airlines body called on Europe to rewrite legislation to ensure that flexibility to pause the border controls could continue, beyond the current absolute deadline of 7 September for the full and final introduction of biometric checks on all applicable travellers.Rafael Schvartsman, Iata's vice-president Europe, said: "I think Europe needs to be much more honest [about] where we are." Under the new system, most non-EU citizens will be fingerprinted and photographed by border staff, with details uploaded to a central database.Schvartsman said: "Normally, we would process a passenger in 20 to 25 seconds, and you're already stipulating that it will take 90 seconds, and on top of that you have unreliability of the systems, the probability that people will be waiting in lines for a long time is very, very high." Travellers to the EU face potential long waits at passport control under the new system, he added: "For most of the Mediterranean, the British are the No 1 incoming tourist – that is a major concern."Future Outlook for Aviation IndustryGreece has already unilaterally announced it will not carry out EES checks on UK nationals. But Schvartsman said it was an issue for many airports and could not be resolved by exempting one nationality: "We also have high demand for American carriers already putting extra flights to European destinations during the summer. You will have an influx of US citizens too."

The Impact of High Aviation Taxes on UK Tourism The cost of travel to and around the UK is keeping millions of tourists away and slowing economic growth, the boss of British Airways said, as he urged a rethink of aviation taxes. The Event Details The airline’s chief executive, Sean Doyle, said the UK had some of the highest aviation taxes in the world and was falling behind countries such as Japan, France and Germany in boosting its inbound tourism. Air passenger duty across most flights was raised by 15% in April, up to £8 a passenger on domestic flights, £15 for European departures, and up to £253 in premium economy seats on long-haul flights. The Data Analysis The UK would not hit ambitious targets for domestic tourism without making travel easier and more affordable, Doyle added. The government has set a target of welcoming 50 million international visitors to the UK by 2030, up from about 40 million tourists at present. The Impact Analysis Doyle warned that unless the affordability issue is addressed, the UK will not reach its target. He cited the high cost of travel, including aviation taxes and rail ticketing, as a major factor. “What’s the biggest challenge in the country at the minute? It’s growth. And what should policy be doing? It should be unblocking growth. If you want to promote tourism and aviation … the last thing you do to encourage that expansion is put the cost of it up,” Doyle said. The Prediction Doyle also warned that the government’s backing for Heathrow’s third runway in pursuit of economic growth could backfire if the airport developed its own scheme at the cost of airlines paying higher charges and reducing their own investments. BA and other airlines have urged the government to pursue a cheaper alternative scheme for a third runway than the current £33bn preferred option proposed by the airport.