EU Transport Commissioner Clarifies Compensation Rules Amid Fuel Crisis
Ryanair has stated that, unlike other carriers, it will not be cancelling summer flights due to its prior hedging of fuel contracts before the Iran conflict began.
European Union transport commissioner Apostolos Tzitzikostas informed the Financial Times that airlines cancelling flights because of fuel shortages this summer remain obligated to compensate passengers under EU law.
“The price of jet fuel is the reason why we have cancellations of flights and if they cancel flights without extraordinary circumstances – jet fuel prices are not extraordinary circumstances – they will have to reimburse the people,”the commissioner said.
Although EU regulations continue to apply in the UK after Brexit, the British government under Keir Starmer has the discretion to adopt a different stance. Last week, the UK government announced it had eased penalties for airlines cancelling UK flights due to fuel shortages.
Ryanair’s Fuel Hedging Strategy and Other Airlines’ Responses
Ryanair, Europe’s largest airline, declared this week that it would maintain its summer flight schedule, having hedged its fuel contracts prior to the outbreak of the Iran war. This strategy has ensured stable fuel prices for the airline until the end of June, when these hedging agreements expire.
In contrast, other airlines, including Germany’s Lufthansa and Ireland’s Aer Lingus, have announced flight cancellations.
Impact of Fuel Crisis on Airlines Globally
Tzitzikostas’s comments coincided with remarks from Tony Fernandes, chief executive of AirAsia, who described the current fuel crisis as more severe than the Covid-19 pandemic, during which flights were grounded worldwide due to travel bans.
“I thought I’d seen it all with Covid . . . but having seen jet fuel go up almost three times — this is much worse,”Fernandes told the Financial Times.
“You wake up one day and your major cost has tripled – it was quite a new experience for me and I’ve been through a lot in my life,”he added.
The surge in fuel costs began after 28 February, when the United States and Israel initiated hostilities against Iran. The effective closure of the Strait of Hormuz has severely restricted oil exports from the Middle East, contributing to the spike in prices.
Ryanair and UK Government Responses
A Ryanair spokesperson stated:
“As Ryanair has hedged 80% of our jet fuel to March 2027 at $67 per barrel – less than half current spot prices – we do not plan any cuts to our schedule this summer.”
The UK government spokesperson commented:
“UK airlines are clear that they are not currently seeing a shortage of jet fuel. Aviation fuel is typically bought in advance and airports and suppliers keep stocks of bunkered fuel to support their resilience.
We continue to work with fuel suppliers, airports, airlines and international counterparts to keep flights operating. We are also consulting on measures to help airlines plan realistic flight schedules which will avoid last-minute disruption and protect holidays,”said a spokesperson for the Department of Transport.
AirAsia’s Long-Term Expansion Plans Despite Crisis
Despite the ongoing conflict and fuel challenges, AirAsia is advancing its long-term strategy. The airline has finalized a $19 billion (£13.9 billion) agreement to purchase 150 Airbus A220-300 jets manufactured in Canada, with deliveries starting in 2028. AirAsia indicated on Thursday that it might double this order to meet anticipated future demand.
The deal, announced at Airbus’s Mirabel facility near Montreal, represents the largest aircraft order in Canadian history.
This agreement is also expected to benefit workers in Northern Ireland, providing sustained employment at the Spirit AeroSystems plant in Belfast, which produces wings for the Airbus A220.
