LAST UPDATE | 1 Apr

RYANAIR BOSS MICHAEL O’Leary said there may be a risk of jet fuel supply being disrupted if the war in Iran continues and the Strait of Hormuz remains effectively shut for tankers.

However, the Irish Travel Agents Association (ITAA) has said that despite the uncertainty and rising fuel costs, there is currently “no evidence of fuel-related surcharges being applied to Irish holidaymakers”.

O’Leary was speaking to Sky News today, where he said Ryanair has purchased forward about 80% of its supply needed until March next year at $67 a barrel of oil. For the remaining 20%, the cost has now almost doubled.

“The more immediate concern is jet fuel supply,” he said. “We [Ryanair] together with our fuel suppliers are constantly looking at the market rates. We don’t expect any disruptions to supply until about early May.

“The fuel companies are happy there won’t be any disruption until early May, but if the war continues, we do run the risk of supply disruptions in Europe in May and June, and obviously we hope the war will finish sooner than that, and the risk to supply will be eliminated.” 

But while tour organisers are allowed to increase prices by up to 8% outside of 20 days prior to departure in response to factors such as fuel costs, ITAA members have reported that no such increases have been passed on to consumers to date.

Most package holidays are now based on scheduled airline services rather than charter flights, which were historically more vulnerable to fuel price fluctuations.

Tom Randles, president of the ITAA, noted that airlines such as Ryanair and Aer Lingus have “hedged their fuel costs, which is helping to stabilise prices in the short term”.

He added that there is still “strong seat availability across many routes, and airlines remain focused on filling capacity rather than increasing fares significantly”.

Randles said this “presents an opportunity” for consumers and that those considering a holiday should “book sooner rather than later to secure the best value”, particularly for short-haul destinations.

He noted that pricing on transatlantic routes have also in many cases become “more competitive, offering particularly good value for those considering travel to the US”.

However, flight costs to destinations such as Australia and New Zealand have increased. 

The ITAA however said that there is “currently no indication of widespread price increases or surcharges impacting Irish consumers other than long haul destinations”.

‘Supply risk’

O’Leary meanwhile said that if the war ends at some point this month and the Strait of Hormuz reopens, there will be no risk to supply.

If it continues, he said there’s a “reasonable” to “low-level” risk that “maybe 10%, 20%, 25% of our supply might be at risk through May and June”.

The Taoiseach was asked about O’Leary’s comments by The Journal this morning before Cabinet.

Martin said: “The situation in terms of fuel, and aviation fuel in particular, is very serious, and that clearly has implications if this war doesn’t stop.

“I think the only route to maintaining what we have [supply] at the moment is for the war to end. If the war continues and if the Hormuz Strait remains closed, then you have the supply shock hitting the economy. And one of the earlier areas where it hits will be aviation.”

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Transport Minister Darragh O’Brien also reacted to O’Leary’s comments this morning, telling reporters the CEO is someone he “highly regards”.

“He has his finger on the pulse of this. Obviously, there are impacts. There are impacts across the transport sector, and if this doesn’t cease soon, there will be impacts on aviation too.”

O’Brien said this was something he raised yesterday at the EU’s meeting of its Energy Council, and it is on the EU agenda. He said he expects something to be published in this regard next week.

“Aviation is critically important to Ireland, and we’re a world leader in aviation – we’ve a crowd of airlines like Ryanair and Aer Lingus and all of the various different experts that we have in airlines right the way across the world.”

The EU Commissioner for Energy yesterday said at the council meeting Europeans should work from home and drive less to save fuel.

Dan Jorgensen endorsed the International Energy Agency’s measures to ease the economic impact of the energy crisis on consumers. These included recommendations to work from home, reduce speed limits, encourage public transport, avoid air travel and increase car sharing.

Additional reporting by Christina Finn at Government Buildings