00:00Germany's biggest airline is drawing up contingencies for fuel shortages this summer.
00:05Lufthansa says the cost of getting its planes into the air will go up by nearly $2 billion this year
00:10due to enormous challenges caused by the Middle East conflict.
00:14The airline says ticket prices could rise and that refueling stops may be introduced on direct long-haul flights to
00:21Asia or Africa.
00:23Simon Cowder is a travel broadcaster and commentator. Great to have you on again, Simon.
00:28Look, on Lufthansa's warnings, how serious is this for airline finances right now?
00:34Well, there is no doubt that there are certain parts of the world, in particular parts of Asia,
00:40where there is a serious lack of aviation fuel,
00:43much of which would normally be coming through on tankers through the Strait of Hormuz from the Gulf.
00:50Having said that, in Europe, where Lufthansa is based,
00:55they are not looking so much at problems with shortfall of fuel there.
01:00What they are doing is, in the case of Lufthansa, cancelling tens of thousands of flights,
01:08which, because of the very high price now of aviation fuel, it is simply not economic to fly.
01:14They would be losing money.
01:16And these are mostly short-haul commuter routes, where you would make a marginal profit with low fuel prices.
01:24As soon as the price doubles, which it has done, then immediately they start losing you money.
01:30But it's interesting that they've also been talking about picking up fuel along the way.
01:35That is something, a practice called tankering, which they may have to bring in
01:40if there are particular places on the Lufthansa network which are running short of fuel.
01:46And it's something which has been done from time to time in various other places,
01:50generally when there is, for some reason, at one particular airport, a problem with fuel supply.
01:55So, we're talking about the impact on airlines, but what about the impact on travellers?
01:59Because premiums are often paid, aren't they, Simon, for long-haul flights that are direct,
02:05and now they're going to have stopovers just to get to their destination.
02:08Oh, sure, yeah. It's just a reflection of the very, very tough times that airlines are going through,
02:15and that is most definitely affecting passengers.
02:18So, we've had, since the Gulf crisis began, an awful lot of airlines putting on new flights,
02:27and that includes many European airlines and also Asian, Australian airlines.
02:32They're putting on new flights which avoid the Gulf, and people are, exactly as you say,
02:38very prepared to pay a premium.
02:40So, for example, to travel from London to Perth, if you've stopped somewhere along the way,
02:47you're used to paying maybe $600, $900, the price now is well over $2,000 one way.
02:56And if you are suddenly having to stop along the way, obviously people will be unhappy about that.
03:02But, unfortunately, there's going to be quite a lot of unhappiness around for travellers,
03:08as well as airlines, as the shortage of aviation fuel really begins to bite.
03:14OK, so travel's going to be more expensive.
03:16It sounds like it's going to be less reliable, more unpredictable.
03:20Is this just a this-summer thing, Simon, or is it the new normal?
03:24I think the airlines will adjust, but what we're seeing is that, yes, we've seen tens of thousands of cancellations
03:31on Lufthansa.
03:32Turkish Airlines has also taken out a lot of flights, but actually most of the European airlines,
03:38as well as the North American airlines, are very much planning to do their normal summer of flying,
03:43partly because, well, in Europe at least, they are locked into low aviation fuel prices due to a practice known
03:50as hedging.
03:52So, therefore, people will be flying around Europe at last year's prices.
03:56It is the northern autumn when things will really become difficult.
04:00That's when demand drops off, the aviation fuel price rise will have worked through,
04:07and I expect that we will see significantly fewer flights for this coming winter compared with the previous one,
04:16simply because many aircraft will be left on the ground because it is simply less,
04:22it's more financially worthwhile than flying them at a loss.
04:26So, make the most of the summer is my message to people because those flights are going to start disappearing.
04:33Next year, I feel a staycation coming on.
04:35Simon Calder, thank you very much indeed.
Comments