Just as aviation was soaring away from the pandemic, it has flown into a fresh storm. On Monday, the cost of crude leapt on the prospect of a US-led embargo on Russian oil exports. Global oil prices have risen nearly two-thirds since the start of the year. Shares in airlines nosedived on Monday.
No wonder. Aviation is the most oil-intensive sector of all, according to ING. For every €1mn of value added output, Europe’s aviation industry uses 60 terra joules of energy. Shipping is close behind, followed by the chemicals industry.
Fuel accounts for 25-40 per cent of airline operating costs. Many airlines have hedges in place. London-listed Wizz Air, normally a holdout, said on Monday it too would cap its fuel cost exposure. But pricier fuel and the need to fly longer routes to avoid Russian and Ukrainian airspace, will still hurt airlines.