How the Jet Fuel Shortage Could Affect Your Vacation Outside the U.S.

While air carriers in Asia and Europe are coping with the oil crisis by rationing jet fuel and cutting flights, American companies in the same segment remain in a more protected position. However, energy experts say no country is immune to problems, writes Forbes.

"Americans are having to weigh things they're not used to thinking about: 'If I fly to Asia or Europe, do I need to worry about getting home? Will my long-haul flight be canceled? Will my short domestic flight to an international airport be canceled?'" said Patrick De Haan, an energy analyst at GasBuddy, which tracks fuel prices and analyzes the petroleum market. "It's a level of anxiety travelers rarely had to think about before. And it could very well get worse."

Poor countries will be the first to feel the effects of the oil crisis.

As jet fuel becomes more scarce, its price is rising everywhere. But the economic impact is unevenly distributed, International Energy Agency Executive Director Fatih Birol told the Associated Press. He said the first to suffer will be "primarily developing countries—poorer nations in Asia, Africa, and Latin America." While they will feel the impact sooner, he concluded, no country is immune from this crisis.

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After China and Thailand stopped exporting jet fuel to meet their own needs, import-dependent markets, particularly Vietnam, Myanmar and Pakistan, began to experience supply shortages.

"Asia is managing the situation at a high level," De Haan added, noting that some governments have restricted domestic flights, while others are "allowing some long-haul flights to remain open because they are crucial for tourism."

Europe is cutting flights

Europe is also under pressure, and Fatih Birol is convinced: “I can say that we will soon hear news that some flights from city A to city B may be cancelled due to a shortage of aviation fuel.”

Indeed, major European airlines, notably Lufthansa, Air France-KLM and Scandinavian Airlines (SAS), have begun cutting their flights to save fuel.

"Some of these flights are becoming increasingly difficult to operate," De Haan admitted. He added that some Italian airports have had to implement fuel rationing. Last week, Airports Council International Europe (ACIE), the airport operators' trade organization, warned that "a systemic shortage of aviation fuel is becoming a reality" in the European Union.

"If there is a risk to 10% or 20% of fuel supplies in June, July or August, we and other airlines will have to consider cancelling some flights or reducing capacity," Michael O'Leary, chief executive of European low-cost carrier Ryanair, said earlier this month.

The US is also not immune to aviation fuel shortages.

De Haan believes that the US, as an energy superpower, is more secure than most countries, producing 13 million barrels of fuel daily and importing around 4 million barrels per day from Canada. Therefore, it will be months before American airlines face serious problems.

Just as richer countries are coping better with the crisis than poorer ones, the most profitable airlines are far more resilient than those struggling. Ultra-low-fare airline Spirit Airlines, currently in bankruptcy proceedings, may reportedly go into liquidation as early as this week. Frontier and JetBlue are also struggling with profitability in the wake of the COVID-19 pandemic.

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However, even United Airlines, the second-most profitable airline in the US, said it could cut up to 5% of its schedule in the third quarter if fuel prices don't fall. Delta Air Lines, which is not only the country's most profitable airline but also the only one with its own refinery, has the most favorable outlook.

"Delta has essentially cut out the middleman and negotiated very favorable agreements to swap gasoline for jet fuel," De Haan concluded.

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