The impact of rising fuel costs on aviation and business aviation

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While the automotive sector is being penalized by the rising price of oil, it is not the only sector. Soaring fuel prices are also having a major impact on the aviation sector and airlines. In this article, AEROAFFAIRES presents the impact of rising fuel prices on aviation and business aviation.

 

The causes of rising fuel prices

 

Fuel prices have been rising steadily over the past few months, mainly due to the war in Ukraine, which has pushed up prices. Indeed, the fear of an embargo on Russian oil products is one of the main reasons. Buyers then redirected to other markets such as North America and the Middle East. As a result, prices for Russian products have fallen while prices in these other markets have risen. The greater the demand, the lower the supply, and the result: higher prices. And in aviation and business aviation even more so because since the economic recovery of tourism after the health crisis of 2019, demand is returning en masse. In addition, the closure of airspace Ukraine / Russia, forces some international flights to make long detours and therefore an additional cost of operating costs and oil consumption.

Other reasons are also behind this price increase such as the loss of value of the euro against the dollar.

 

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Repercussions on the price of airline tickets

 

The increase in airfare prices would be around 14%. Fuel is one of the first expenses in the organization of a flight, after labor. Indeed, it represents up to 35% of the operating costs of airlines. Faced with this rise in prices, airlines are obliged to increase their fares on their flights.

Business aviation is affected differently by this price increase because when a company or an individual is able to buy a multi-million dollar private jet, the price of fuel is not a concern. This is a boon for business aviation, which is facing fuel price inflation, compared to the commercial aviation sector, which is suffering from this situation. However, for the business aviation industry, such as air brokerage companies, they have to deal with the increase in fuel prices, which is also reflected in the price of a private flight, while offering the best rate to customers, defying the competition.

The challenge for private aviation operators is to retain the new clientele that has flocked during the pandemic, despite the recovery of commercial aviation and the fuel price shock.

 

Finding alternatives to jet fuel

 

Rising jet fuel prices can be a motivating factor in trying to develop new fuel alternatives. This can be coupled with the environmental impact that aviation can have, as aircraft manufacturers are building more and more environmentally friendly aircraft. However, despite the increase in the price of kerosene, more environmentally friendly fuels are still more expensive than kerosene, which is the main reason why airlines prefer to use it. It is still two to five times cheaper than a more environmentally friendly alternative. Moving away from kerosene is a huge challenge for the aviation industry, which is asking governments to take measures to reduce the price of alternative fuels.

For your next business trip or vacation, if you want to avoid skyrocketing prices, we advise you to book your flight as soon as possible.

 

At AEROAFFAIRES, we put our expertise at your disposal to offer you private jet flights that suit you. For any charter request, please contact us at +33 (0)1 44 09 91 82, by e-mail: charter@aeroaffaires.com or fill in our online quote. We will respond as soon as possible.