BUSINESS NEWS Iata AGM: The price of fuel dominates event in Rio at the start of this week. Ian Taylor reports


Global airline fuel costs tipped to hit $350bn this year


Global airline fuel costs are forecast by Iata to rise by almost 40% year on year to $350 billion in 2026, based on an expected average crude oil price of $95 a barrel – close to the oil price at the start of this week. However, Iata expects jet fuel


prices to average $152 a barrel for the year, up almost 70% on last year. Airlines in Europe face


“significant cost pressure” as a result, Iata reported, as the region is “highly reliant on Gulf imports” of jet fuel. While some of this would be


mitigated “thanks to a pre-crisis hedging ratio of 70%” of European carriers’ fuel needs, Iata warned: “Higher costs will feed through.”


It noted: “Europe has seen some


traffic gains by providing direct connectivity between Europe and Asia, replacing travel through Gulf hubs. However, parts of Europe are still suffering from airspace restrictions over Russia.” Iata also warned “a weakening


macroeconomic backdrop” in Europe, with slower growth and rising costs, would “weigh on household purchasing power”.


European airlines ‘highly reliant on Gulf imports’


Walsh warns sector not on track to meet SAF target of 5% by 2030


Carriers will spend an estimated $4.3 billion on sustainable aviation fuel (SAF) this year, taking their consumption to 2.4 million tonnes. But that amounts to just 0.8% of aviation fuel consumption. Iata director general


Willie Walsh told the Iata AGM: “Airlines have sent unambiguous demand signals for SAF, with over 180 purchase agreements. But where is the SAF?” He noted “the goal is 65% or


500 million tonnes of SAF by 2050” and said: “The gap is not closing fast enough.” Walsh noted SAF projects had been “cancelled or downsized”


SAF usage stands at 0.8%


in Sweden, the Netherlands, Germany, Spain, Denmark, the UK and Singapore and said: “Subsidies to extract fossil fuel are just too appealing.” He described the


situation in the EU and UK, where SAF mandates


have been in place since January 2025, as “absurd”, saying: “Airlines are paying billions in ‘compliance add-ons’ [which] compensate fuel suppliers for penalties for not making sufficient SAF.” Walsh warned “there is no path


to meet” a 5% emission reduction target through SAF by 2030 and said: “Hope for 2050 is fading fast. We need a realistic timeline.”


Iata tips airline profits to halve $100bN


The rise in jet fuel prices due to the Gulf crisis will cut global airline profits by half this year on 2025 despite carriers aiming to recoup much of the additional costs through higher fares. That is according to airline


association Iata, whose director general Willie Walsh told the Iata annual general meeting in Rio de Janeiro: “We expect average jet fuel prices to be 70% higher year on year. That will add $100 billion to our collective fuel bill.” Walsh noted: “Demand is holding


up even as airlines are raising fares. But growth will inevitably be slower. We expect profitability to halve from 2025.” Iata now forecasts a 2% rise in


global passenger numbers this year on last, but Walsh said: “The big unknown is how long travellers can tolerate higher costs.”


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Forecast rise in airlines’ jet fuel costs this year due to higher prices


He argued the rise in fuel costs


had been made worse by carriers being forced to operate aircraft “less efficient than planned” because of the continuing failure of manufacturers to deliver aircraft and engines on time. Iata reported the backlog


in aircraft orders has surpassed 18,000 and the shortfall of more fuel-efficient aircraft which would now be in use if not for production delays had passed 5,000. This meant “higher lease rates and increased maintenance costs”,


said Walsh, with the retention and operation of older aircraft meaning the average age of the world’s fleet had reached a record 15.2 years. Iata estimated the total cost


of delivery delays to airlines at $11 billion last year and Walsh warned: “Today’s higher fuel prices will only make that worse.” He accused engine manufacturers


of “gouging” the airlines and said: “Get back to making engines that work and that last.” Walsh announced plans for Iata to


invest “significantly” in strengthening its office in Brussels, insisting “a strong airline voice is needed” in Europe He claimed global standards “are


being ignored” on aviation taxes and air passenger rights, describing the EU Regulation 261 on air passenger rights as “the poster child of bad regulation” and accusing the EU


Parliament of “hijacking” proposals for reform. Walsh also hit out over Heathrow


expansion, accusing “a floundering UK government” of being “desperate for the growth a third runway will catalyse, but not paying sufficient attention to basic economics”. The former boss of British


Airways and its parent IAG, Walsh is now poised to take over as chief executive of IndiGo Airlines in India.


11 JUNE 2026 47


Global carryings are tipped to rise 2% this year


PICTURE: Shutterstock/Fotokon


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