Just when there was hope on the pandemic horizon, airlines now face a second headwind of skyrocketing oil prices — which could make airfares even more expensive. Fallout from Russia’s invasion of Ukraine, including sanctions and oil import bans, helped push up the price of jet fuel by more than 27% to US$142 a barrel in the week ending March 4, according to S&P Global Commodity Insights. “If the jet fuel price stays that high, then over time it is reasonable to expect that it will be reflected in airline yields,” said IATA DG Willie Walsh Thursday. Concerns over fuel, which is airlines’ biggest expense after labour, may prompt carriers to recoup that cost with pricier tickets. Demand for travel among Canadians is rising after two years cooped up under COVID-19 restrictions, but the bigger booking numbers could plateau if ballooning fuel costs are passed on to passengers through higher fares, said John Gradek, head of McGill University’s aviation management program. Air Canada says fuel costs always factor into ticket prices. “We always say that ticket pricing is dynamic and that fares can change frequently, both up and down. However, one cannot assign a particular cause to any price movement that may occur because there are many elements that go into setting fares” — such as competition, demand and airport charges — Air Canada spokesman Peter Fitzpatrick said.<br/>
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Airlines cancelled hundreds of flights to and from German airports on Monday as security workers went on strike amid a wage dispute. Security workers staged a full-day walkout at six airports including Duesseldorf, Cologne/Bonn and Berlin on Monday, and one-day strikes have also been called for other airports on Tuesday including Frankfurt and Hamburg. The strike comes as airlines are reeling from the impact of the war in Ukraine, with soaring fuel prices and airspace closures, after two years of low travel demand due to the coronavirus pandemic. The walkout by security staff has resulted in a high three-digit number of flight cancellations, German airports association ADV said. Some 160 of them were at Duesseldorf airport, accounting for more than half of the planned 290 departures and arrivals, the airport said. At Cologne/Bonn, 94 out of 136 flights were called off, and Berlin airport's website also showed many cancelled flights. Tuesday's walkout will hit Germany's busiest airport, Frankfurt, which handled around 2.1m passengers last month. Frankfurt airport operator Fraport said only transit passengers would be able to get to their flights on Tuesday, when the airport was originally due to handle around 770 departures and arrivals, serving close to 80,000 passengers. Lufthansa, Germany's flagship carrier, which has a hub at Frankfurt, said it was cancelling 48 flights on Tuesday.<br/>
EVA Air will convert three of its B777-300(ER)s into dedicated freighters with Israel Aerospace Industries enlisted to carry out the works, which will take place from 2025. A stock market disclosure said each B777-300(ER)(SF) conversion would cost not more than US$40m. While the identity of the airframes involved was not revealed, EVA Air operates thirty-four B777-300(ER)s of which twelve are owned. Those twelve are among the oldest in the fleet ranging primarily between 12 and 15 years old. The Taiwanese carrier also operates an existing fleet of eight B777-Fs.<br/>
Tata Group has appointed N Chandrasekaran as chairman of its Air India airline, a company spokesperson said on Monday, weeks after it acquired the former state-run carrier in a $2.4b equity and debt deal. Chandrasekaran is chairman of the autos-to-salt Tata Group and several of its companies, including Tata Motors. Tata regained control of Air India in January after nearly 70 years. Tata is also on the lookout for a new CEO to steer Air India after its first choice, Turkey’s Ilker Ayci, refused to take the post due to opposition in India over his previous political links in Turkey. While the airline has lucrative landing slots, debt-laden Air India faces an uphill task to upgrade its aging fleet and turn around its financials and service levels.<br/>
Airlines that have continued to hedge fuel now have some buffer against the impact of soaring oil prices. They had previously suffered massive hedging losses when oil prices sank at the beginning of the Covid-19 pandemic two years ago. They include Singapore Airlines and Qantas, which had earlier locked in part of their future fuel needs at lower prices. Meanwhile, some airlines that have not hedged fuel are instead turning to fuel surcharges to cushion the increased costs. But experts have said that the continually rising prices triggered by Russia's invasion of Ukraine will leave all airlines in a pickle moving forward. So carriers that have said they would boost capacity may have to scale back their plans. Russia, a major oil and natural gas producer, has been hit by tough sanctions since late last month. Independent aviation analyst Brendan Sobie from Sobie Aviation said the high fuel prices will bump up the variable costs, or the additional cost of a plane taking to the skies. "Some airlines that were generally keen to add back capacity as international travel recovers will now have to think more carefully about adding back capacity, as it will be harder to cover variable costs," said Sobie.<br/>