ICSM Airline Insolvency News: hikes in fuel prices due to the Middle East war sees a growing crisis for airlines
By Harry Mottram: Since the start of the USA-Iran-Israel war in February the price of oil has risen from around $70 a barrel to over $100 a barrel on a rollercoaster of price fluctuations. It has led to a knock-on hike in price for jet fuel slashing profits potentially and financial viability for airlines and holiday firms. The industry has repeatedly said since the war began that there is no shortage and flights and holidays are safe – but the evidence suggests otherwise. The Government agreed in May that airlines can cancel or merge some flights as the crisis continues. It is widely being reported that jet fuel stocks for European and British airlines are very low with cancellations and higher fares likely.
The BBC reported: “The UK imports about 65% of the jet fuel it uses, a significant portion of which comes from the Middle East under normal circumstances. But the closure of the Strait of Hormuz means those supplies cannot get through.”
Since the conflict broke out four UK-based airlines have gone to the wall. Ascend Airways has bee liquidated as have EcoJet Airlines while Zenith Aviation Limited and European Cargo collapsed into administration. In the USA Spirit Airlines went bust claiming its’ failure to secure a $500m (£368m) bailout from the Trump administration was the reason.
European Cargo said in a statement: "The company has ceased trading and, regrettably, redundancies are being made. Affected employees are being contacted as a priority – while also engaging with customers, suppliers, creditors and other key stakeholders."
Edinburgh based EcoJet Airlines appointed liquidators in May bringing to an end the firm founded in 2023 by Dale Vince, the founder of Ecotricity and owner of Forest Green Rovers FC.
ICSM’s Ian Carrotte said that the longer the Strait of Hormuz in closed or heavily restricted the more likely airline firms will cut costs, hike prices and trim the number of flights they operate. He said: “Like many sectors much of the business of airlines is built on confidence. When there is an airline disaster there is a rise in cancellations by passengers – the same is true of wars. Everyone is keen to see it end as soon as possible as it has a long-term negative effect on trade and potentially a global economic crisis if it continues.”
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