Earlier this week, the airline SAS announced it would cancel over a thousand flights in April and also raise ticket prices. The background is the global energy crisis, with a surge in oil prices following the closure of the Strait of Hormuz.
For airlines, this is very bad news. According to the industry organization IATA, the price of jet fuel has skyrocketed by 82 percent in the past month, and is now at a level similar to when the war in Ukraine began in 2022.
"In the end, everyone is exposed to rising costs. What will happen is that many airlines will make a loss, and the only way out is to raise ticket prices," says Eddie Wilson, CEO of the airline division of the Ryanair group, on a temporary visit to Stockholm.
Better position
However, he emphasizes that Ryanair is in a better position than many competitors. This is based on the fact that it has hedged 80 percent of its jet fuel costs at $678 per ton, while SAS, for example, chose a different strategy and now has to pay a higher price, Wilson points out.
"They (SAS) will have to make some very quick decisions. Ryanair is better positioned in terms of costs and we will be the cheapest in the market, but it looks like prices will go up based on the fuel issue."
Ryanair's CEO does not want to and cannot speculate on how much more expensive ticket prices might become this summer. The company, which is listed on the stock exchange, is in a quiet period ahead of the next interim report.
Tough blow
For the aviation industry in general, however, the events of recent weeks are another tough blow. After the pandemic, which nearly knocked out several players, there has been a strong recovery, and a number of airlines have announced major investments, including new aircraft models. For Ryanair, this includes starting five new flight routes this summer from Sweden.
Could there be a scenario where a shortage of jet fuel means even more cancellations in the industry?
"No, I don't think so. About 20 percent of the world's jet fuel passes through the Strait of Hormuz, which pushes up the price but doesn't make the supply disappear completely."
