Post by Luk De Wilde

Middle East Disruptions and High Fuel Prices Halve Airline Industry Profitability (IATA) ——————————————————————— Europe: Highly reliant on Gulf imports for jet fuel, Europe is facing significant cost pressure. While some of this is mitigated thanks to a pre-crisis hedging ratio of 70% of its fuel needs, higher costs will feed through as hedges roll off. Europe has seen some traffic gains by providing direct connectivity between Europe and Asia, replacing some travel through Gulf hubs. However, parts of Europe are still suffering from airspace restrictions over Russia. Importantly, a weakening macro-economic backdrop, with slower growth and rising energy costs, is expected to weigh on household purchasing power. European airlines operate with cost pressures from onerous regulations, including SAF mandates, as well as elevated airport and air navigation charges. Ongoing industrial actions in several markets contribute to operational disruption and limit flexibility. These factors suggest that Europe’s competitive position could weaken yet further, even once market conditions normalize. (source: IATA)