Virgin Atlantic CEO Corneel Koster has indicated that the fuel crisis caused by the Iran conflict is unlikely to ease anytime soon. The airline industry is among the worst-hit sectors, as the crisis has disrupted fuel supplies globally, with the Strait of Hormuz remaining choked.
Speaking about Virgin Atlantic’s fuel reserves, Koster said he has “limited visibility” on jet fuel availability beyond the end of May. “I’m really not concerned until the end of May,” he said in an interview, according to a Bloomberg report. “After that, I have limited visibility.” He added that the airline has hedged nearly 60% of its fuel requirements.
The UK-based carrier is in talks with governments and its base, London Heathrow Airport, to ensure adequate fuel supply.
Koster also noted that the jet fuel crisis is likely to persist until supply chains return to normal. “It will take time before supply chains stabilise and prices return to pre-war levels,” he said.
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Oil prices crossed $100 a barrel on Monday after the US announced it would block ships travelling to or from Iran through the Strait of Hormuz. In response to rising fuel costs, several airlines have increased fares by adding fuel surcharges.
Meanwhile, ACI Europe warned the EU last week that Europe could face a systemic jet fuel shortage within three weeks if restrictions in the Strait of Hormuz continue, according to Bloomberg.
To offset higher fuel costs, Virgin Atlantic has raised fuel surcharges on tickets, Koster said. Despite this, the airline continues to see strong demand across its network, particularly for routes to the Caribbean, India, and the US.
Koster also said that in such a time where there is a fuel crisis, borne out of the war, it is crucual for airlines to to be more critical about the destinations they serve. Last year, Virgin Atlantic had added Riyadh to its route. Amid the shortage, the British airlines will not be looking to add more routes. However, Koster did not comment on that.
In India too, airlines including Air India, IndiGo, have increased ticket prices and adding fuel surcharges on many routes, while also raising baggage and service fees.
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