Global airlines are expected to spend an additional $100 billion on aviation fuel this year as geopolitical tensions in the Middle East continue to push up energy prices, according to the International Air Transport Association (IATA).
IATA Director General Willie Walsh issued the warning at the conclusion of the association’s 82nd Annual General Meeting and World Air Transport Summit in Rio de Janeiro, Brazil, saying the sharp increase in fuel costs is likely to translate into higher ticket prices for passengers worldwide.
Walsh said jet fuel prices are projected to remain about 70 per cent higher throughout the year, placing significant pressure on airline finances and potentially reducing global industry profits to about $23 billion.
“High oil prices will inevitably mean higher ticket prices. There is simply no way to avoid it,” Walsh said.
The increase follows disruptions to global oil and fuel supply chains triggered by escalating tensions in the Middle East, which have sent crude oil prices soaring above $100 per barrel.
According to Walsh, airlines are attempting to absorb some of the additional costs, but the scale of the increase leaves carriers with limited options.
When fuel expenses consume more than half of airline revenues, he explained, operators are typically forced to either increase fares or reduce capacity.
Despite the challenging environment, Walsh maintained that the industry remains resilient, noting that global air traffic continues to grow and airlines are still expected to remain profitable overall.
He also sought to ease concerns about potential fuel shortages, saying the current situation differs significantly from the crisis experienced during the COVID-19 pandemic.
“You are looking at an industry that is still profitable and still forecasting growth. Traffic is up, and outside the immediate impact on the Middle East, the operating environment remains relatively positive,” he said.
Nevertheless, Walsh acknowledged that the duration of the crisis remains a major uncertainty for airlines, passengers and cargo operators alike, warning that prolonged high fuel prices could eventually affect demand and place additional strain on carrier finances.
