Tourists and vacationers sit and lie on their towels on the beach, others play and swim in the English Channel in Saint Pol de Léon, France.
Nicolas Guyonnet | Afp | Getty Images
Europe’s jet fuel crisis threatens peak travel season, but consumers are instead looking to vacation closer to home to save money and avoid flight disruptions.
European airlines have been hit hard since the start of the US-Iran war, as they face rising fuel prices as well as a shortage of jet fuel while the Strait of Hormuz remains blocked. The region typically imports 75% of its jet fuel from the Middle East.
Jet fuel prices rose 103% at the end of March compared to the previous month, according to the International Air Transport Association.
THE The head of the International Energy Agency, Fatih Birol, warned in April that Europe was on the verge of running out of jet fuel within weeks if it was unable to find alternative export sources.
“I think the trend you’ll see this summer in Europe is that people will start to vacation at home.”
Michael O’Leary
CEO of Ryanair
While fuel costs represent around 20-40% of an airline’s operating costs, many are now offloading these costs by increasing surcharges and canceling unprofitable routes. German carrier LufthansaScandinavian airline SASand Franco-Dutch airline Air France-KLM are among those cutting flights.
British holidaymakers are now turning to destinations closer to home in southern Europe, including France, Spain and Greece, and considering alternative travel options including trains, as the war in Iran raises the stakes for long-haul flights.
“I think the trend you’ll see this summer in Europe is that people will start to vacation at home,” Ryanair” CNBC CEO Michael O’ Leary told CNBC’s Ben Boulos at the Norges Bank Investment Management Conference in Oslo in April.
“I think people will increasingly decide: let’s book Portugal, Spain, Italy, and avoid the Middle East or long-haul travel… we’re seeing people abandon the Middle East or long-haul travel and move towards short-haul,” O’Leary added.
Rail transport sees gains Eurostar tickets to France purchased by UK residents soared 42% in April from the previous month, and were up 25% year-on-year, according to data from travel booking platform TrainPal shared with CNBC. Just over half of tickets booked by Brits were for travel beyond 30 days of purchase.
The data also showed an increase in plans to travel to Europe by train, with train ticket sales by Britons for trains in France soaring 98% from the previous year, 61% for Spain and 92% for Italy.
“It’s no surprise that talk of jet fuel shortages is leading to increased Eurostar bookings and train travel across Europe for UK travelers,” said Alvaro Ungurean, Trainpal’s commercial director in Europe.
“Thankfully, train travel makes mainland Europe still very accessible to UK travelers this summer, and we actively encourage those who are concerned about canceled flights or international disruption to explore train travel as an alternative option,” he added.
Airlines will face strong competition from rail this summer, especially since European trains are used to carrying more passengers than aviation each year, according to Allianz Trade. noted in research published in April.
The study warns that Europe is one of the “most structurally exposed regions” to the jet fuel crisis because it only produces about 50% of its kerosene – a type of jet fuel – domestically.
Between 2014 and 2024, railways carried 81.2 billion passengers, compared to 8.9 billion passengers carried by airlines, according to Allianz.
“What’s changing the game right now is the higher plane tickets and the price of gasoline which is quite high,” said Ano Kuhanathan, head of corporate research at Allianz.
He noted that British travelers typically go to France and other nearby European destinations when the price of diesel is quite low and cheaper than the train.
“But at the moment, with the high prices of diesel and gasoline, I think there might also be a little more interest in train travel,” he said.
He added that potential flight cancellations also weigh on travelers’ decision to choose rail.
“If you decide to travel abroad and for whatever reason your flight home is canceled, you’re on your own, you’re probably stuck in a foreign country and you need to find accommodation. So clearly, I think all of that is weighing on people’s thinking.”
Southern Europe dominates demand Tourism company TUI Group reported a strong trend of consumers booking last-minute holidays to Western Mediterranean countries in particular this year, with Spain, the Balearic and Canary Islands as well as Greece being the most popular destinations this summer.
At the same time, reservation tracking tools report a gain of 32% over one year for Spain and 20% for Italy, Greece and Portugal, according to the Allianz group.
Kuhanathan explained that British travelers have historically favored southern Europe and that the war in Iran will “reinforce” this trend. “What is clearly going to have detrimental consequences is long-haul flights to Asia, and perhaps Latin America.”
Stephen Furlong, senior transportation and logistics analyst at Davies, previously told CNBC that airlines are responding to rising fuel prices by “reducing frequencies and lowering higher frequency routes because some routes don’t make sense at these higher oil prices.”
Furlong said customers could vacation closer to home while uncertainty persists.
“It is possible that in the short term we will see increased demand for leisure travel closer to home, such as in Spain, Portugal and France, as opposed to the Eastern Mediterranean,” Furlong said.
Stays, domestic tourism As airfare prices rise globally, families in the UK and Europe are thinking about their finances before committing to a foreign holiday.
Allianz’s Kuhanathan said “economic uncertainty”, fears around the job market and AI are all contributing to travelers looking to be more economical this year.
Some Brits may opt for staycations or not travel at all. “There will be a little more domestic tourism. This is already a historic trend, and it could strengthen, certainly in the current context,” Kuhanathan said.
Earlier this month, Airbnb searches for stays in the United Kingdom increased 15% year-over-year, according to data shared by the vacation rental platform with CNBC.
Rural areas including Northumberland, Pembrokeshire, Herefordshire, Gwynedd and the Derbyshire Dales rank among the top 20 most booked UK destinations for the May Bank Holiday.
Lisa Marçais, Managing Director Northern Europe and EMEA at Airbnbsaid there was a marked increase in demand for UK spring and summer getaways, which are generally more accessible and better value for money.
“If you are not very confident about your economic future and your vacations are becoming more and more expensive, perhaps you will decide to save money for a rainy day instead of vacationing in the south of Spain,” Kuhanathan added.
