Airplanes, the oil drops and the companies make maxi-aperture. But for passengers no savings on tickets

With the price of oil with a clear drop, European airlines are negotiating the purchase of convenient figures of important quantities of kerosene to be used in the coming months and years. But there is little to exult: this will not lead to lower rates for all passengers. Several vectors will be held the profit margin, a bit to protect themselves from current uncertainties, a little more useful. This is what the Courier by three managers of as many aviolinee aware of the investment plans approved by the CEO and financial directors.

The impact on costs

Fuel is one of the most significant expenditure items for European companies: Ryanair, for example, pays over over 5.2 billion euros per year. The purchase of Cherosene represents between 25 and 40% of the total expenditure incurred in a year, thus placing themselves in the first or second place (after the shopping for the staff). With the union dialectic that is leading to renegotiating increasingly burdensome working contracts – even on strikes -, the carriers seek alternatives to reduce costs. One of these, when possible, aims at savings on fuel.

What is the « Fuel Hedging »

One of the best known ways – for those who can afford it – is the « Fuel Hedging ». These are agreements that the Aviolinee sign with the suppliers and with which the purchase of a amount of fuel is suffered at a certain price that remains blocked for the duration of the agreement, usually 12-18 months. It should also be noted that the price of the oil barrel is not the same as that of the Jet Fuel. If the first, in the week ended on 11 April it was 65.39 dollars – according to Placts/iata data -, the kerosene for planes was 82.91 dollars.

The numbers

In his documents deposited Ryanair, the first low cost of Europe, claims to have purchased 78% of the kerosene he will need in the financial year 2025 (April 1, 2024-31 March 2025) at a price of 790 dollars per ton and 76% at 770 dollars for the following twelve months. EasyJet negotiated 82% of the quantity required on the semester October 2024-Marzo 2025 at 807 dollars per ton and 64% at 770 dollars in the following six months.

Protection from the impinics

Why do the European companies (and Asian) make « Fuel Hedging »? Because in this way they protect themselves for a large part from the sudden surge in the price of oil – caused by geopolitical crises or other factors -, thus keeping costs at bay. In April 2020, with the lockdown imposed to contain the spread of the crownavirus and the stop to the movements, the oil barrel touched the $ 13-14 (from 68-70 of 2019). And so, also to reduce expenses, the low cost Wizz Air decided to abandon the « Fuel Hedging ». But when Russia invaded Ukraine in February 2022, the barrel splashed to 133 dollars and in the April-June quarter of that year the failure to « cover » cost Wizz Air at least 400 million euros.

The possible benefits

Now, with a curve price curve that remains on the levels of five years ago, the carriers exploit the opportunity, fearing new denies. « The cost of the barrel travels to 62-64 dollars, are really interesting prices and for this we are buying significant shares to be used in the future », confirms to Courier On the phone Michael O’Leary, CEO of the Ryanair group. « For the financial year 2026 we blocked 14% at 70 dollars per barrel », with an estimated saving of 80-100 million dollars only for that 14%. If it extended 80%, the savings would be half a billion.

Economic uncertainties

Economic benefits that, promises CEO O’Leary, « we will also pass on the rates proposed to consumers who will book with us ». But other leaders of European carriers behind the scenes anticipate that travelers will have no facilities. « With all the unknowns of this period, starting from global commercial tensions, and the environmental taxes imposed by the EU, perhaps it is appropriate to strengthen the case ». Translation: Needless to hope to pay less. On the contrary: it is already so much if it won’t go out more.