- No disruption to jet fuel supplies expected through end of 2025
- Few airlines well hedged going into next year at higher oil prices
- Jet fuel running at approximately 50pc more expensive than Brent crude
- Refinery and tanker shortages present challenges for 12 to 18 months
- CORSIA described as simplest solution to reduce ETS burden
Michael O’Leary of Ryanair is itold A4E briefing in Brussels that no disruption to jet fuel supplies will occur through the end of 2025 during the Airlines for Europe briefing in Brussels. Airlines and passengers benefited from well-hedged positions going into the year. Few carriers are well hedged going into next year with hedging at significantly higher oil prices.
O’Leary shared that costs would be passed to consumers in the form of higher fares. He shared that jet fuel was materially more expensive with crack spreads widened. Jet fuel historically was 10pc to 15pc more expensive than Brent crude but was running at approximately 50pc more expensive. Refinery and tanker shortages would present challenges for 12 to 18 months.
The briefing heard that Air Baltic and Volotea were members going through procedures and should survive. O’Leary shared that he would not comment on measures carriers in the Middle East should take following the Flydubai incident. The European Union needed to reduce the burden of ETS on intra-EU air travel with CORSIA as the simplest solution.
Michael O’Leary shared: There’s going to be no disruption to fuel supplies to the end of the year. I don’t really quite understand the reference to Air Baltic or Volotea, both of whom are members and we want to see them survive and emerge from the procedures they’re going through. We are all facing an enormous cost challenge next year.
We and our passengers have benefited from the fact that as an industry we were very well hedged going into this year. Very few of us are well hedged, or at least we’re hedged at significantly higher oil prices, almost double this year’s oil price, going into next year. Those costs are going to be passed on to consumers in the form of higher fares. I have no doubt about that. But there is no question over availability of jet fuel in Europe this winter or into next summer either, unless there’s some unforeseen event.
The crack spread has widened materially, so jet fuel is materially more expensive. Historically jet fuel was about 10–15pc more expensive than Brent crude. It’s currently running at about 50pc more expensive, and I don’t see that changing for the next 12–18 months as the Ukrainians are attacking Russian refineries and the Houthis and Iranians are attacking refinery capacity in the Middle East. Refinery and tanker shortages and refinery capacity are going to be a real challenge, and that’s reflected in a much higher price of jet at the moment, something we’re going to face through all of next year.
Which again is why we need the European Union to reduce the burden of ETS on intra-EU air travel. The most simple solution would be moving to CORSIA. On the other part of the question about what other carriers should be doing: I’m not going to comment on that. I don’t think it would be appropriate for today’s press conference.
