Airlines are once again being put to the test amid the pandemic. Sanctions against Russia in the context of the Ukraine conflict have caused fuel prices to rise tremendously in recent weeks. In addition, due to geographical flight bans, flight routes have had to be adjusted and, in some cases, extended. Will flying become more expensive for passengers now?

Rising jet fuel prices

Many airlines hedge the costs of their jet fuel—so-called fuel hedging. In hedging, a certain amount of fuel is purchased at a fixed price and delivered at a later date. Major airlines even employ hedging analysts to determine when to buy and when not to buy. Given the current record-high prices, now is clearly not the time to buy fuel unless absolutely necessary.

Nevertheless, some airlines are now paying top prices for their jet fuel. Three major airlines—American Airlines, Delta Air Lines, and United Airlines—have not hedged their jet fuel. European airlines are doing better in comparison. Air France/KLM, Lufthansa, IAG, and easyJet have hedged 60% to 72% of their fuel costs for 2022. However, as soon as the hedging contracts expire, even the well-hedged airlines will be exposed to the current cost pressure just as the uninsured airlines are.

If the airlines do not want to fly in losses again after the pandemic, they likely have no choice but to increase ticket prices or fuel fees.

What about current flight bookings? If the flight ticket has been paid for and issued, subsequent surcharges due to increased fuel prices are not permitted. The airlines must abide by the contracts they have established: If they have not factored in any risks and have not hedged their fuel purchases, this is their own operational risk and it has no influence on already existing contracts of carriage.

In the event of a rebooking, however, the airlines are entitled to charge higher fares. Yet, if merely a reservation for a flight ticket has been made with the airline, the fare remains valid only until the set deadline. If the customer books after that deadline, the airline is entitled to adjust the fare, just as in the case of a rebooking. The airlines’ conditions of carriage, to the contrary, remain reserved.

Changes to flight routes

Due to current geographical flight bans, airlines have to adjust their routes, especially for journeys to Southeast Asia. This can significantly increase flight times and thus lead to higher fuel consumption. Just like the increase in fuel prices, flight diversions or delays are expenses that also represent operating risks for the airline. Such potential expenses must be calculated by the airlines in advance and included in the ticket costs, asa subsequent surcharge is inadmissible.