Airlines cut routes in response to rising jet fuel costs amid Iran war

Airlines are cutting routes this summer as they face rising jet fuel costs amid the Iran war. 

Air Canada, Delta, and other airlines said Friday that certain routes will be impacted. 

“The spike in oil prices is big news in general and the impact on jet fuel prices is pronounced,” Stephen Rooney, lead economist at Tourism Economics, told CBS News. “Jet fuel is a huge cost for airlines, especially on longer-haul flights.”

Airlines pre-sold tickets based on expectations that fuel costs would remain relatively stable. Rooney expects them to cancel some flights based on rising fuel costs. Jet fuel prices have doubled since the war began on Feb. 28, raising costs for airlines. Jet fuel typically accounts for roughly 25% to 30% of overall costs, according to industry analysts.

“They’ve sold tickets on the basis of certain fuel price expectations, but when that goes up, sometimes they’ll cancel flights, or add surcharges,” he said. “Tickets are sold under contract, and you can’t backtrack, so they cancel some routes to avoid that.” 

That could mean turbulence for summer air travel. 

Routes canceled as fuel costs rise

Delta Air Lines on Friday said it is cutting four routes this summer.

It’s cutting certain flights from John F. Kennedy International Airport in Queens, New York; Detroit and Boston through September as part of its “normal planning process,” the airline said in a statement to CBS News. When asked about fuel costs, the airline said the decision to cut routes was made based on a “variety of factors,” including operating costs and broader operational considerations when making schedule updates. 

Here is where it’s reducing service:

• JFK to Memphis from Jun 7 to Sep 7
• JFK to St. Louis from Jun 7 to Sep 7
• DTW to Reykjavik from May 7 to Jul 6
• BOS to Nassau from Jul 18 to Sep 5 

“We will directly contact any impacted customers with alternate options,” an airline spokesperson said in a statement to CBS News. 

International Energy Agency head Fatih Birol said that European airports have about a six-week supply of jet fuel before it runs out. 

“Some of the flights from city A to city B might be canceled as a result of a lack of jet fuel,” Birol said, noting that the current disruption is “the largest energy crisis we have ever faced in history.”

Air Canada on Friday said it’s cutting routes from Toronto and Montreal to John F. Kennedy International Airport in New York from June 1 through October 25, citing rising jet fuel costs. 

“As jet fuel prices have doubled since the start of the Iran conflict and some lower profitability routes and flights are no longer economic, and we are making schedule adjustments accordingly,” Air Canada said in a statement to CBS News. 

KLM Royal Dutch Airlines also said it’s adjusting its flight schedule this month due to rising costs as certain routes are “no longer financially viable to operate.” 

German airline Lufthansa also said it will shut down a regional airline this week, grounding planes “in view of significantly increased kerosene prices.”

Alarming disruptions

The disruption to the aviation industry is a growing cause for concern, according to airline analysts. 

“I don’t recall ever seeing anything like this on such a large scale, it’s alarming,” airline industry analyst Henry Harteveldt told CBS News senior transportation correspondent Kris Van Cleave. 

U.S.-based airlines are slightly better positioned than European carriers, because the U.S. produces most of its own jet fuel. 

But that could spell trouble for U.S. travelers flying to Europe, who could face disruptions.  

“There may be some routes where the airline says, you know what, it’s just too risky to send a plane over to Europe if there’s not enough jet fuel at your originating airport, your flight may have to make an intermediate stop to get more fuel along the way. That means a longer trip home,” Harteveldt said.  

Iran on Friday said that the Strait of Hormuz, which has been blocked to tanker traffic since the war began, had reopened Friday amid a ceasefire between Israel and Lebanon. 

Once tankers, carrying about 20% of the world’s oil supply, start sailing through the strait again, jet fuel prices will return to normal — but not immediately. Analysts expect it to take weeks, if not months, for the fuel supply to stabilize, and for oil prices to return to normal levels.