Europe’s smaller airports are facing a significant challenge, as highlighted by the head of the Airports Council of Europe. Olivier Jankovec, the director general of ACI Europe, has expressed concerns that some of the region’s smaller airports could be at risk of closure due to potential jet fuel shortages resulting from the ongoing crisis in the Middle East.
Following the closure of the Strait of Hormuz during the Iran War, the cost of jet fuel has surged, leading to a doubling in prices. Consequently, numerous airlines have been forced to cancel flights, impacting regional airports disproportionately. These airports are more susceptible to reductions in airline capacity and fare increases, given the price sensitivity of demand on their routes compared to larger airports. Mr. Jankovec noted that regional airports are still struggling to recover from the effects of the COVID-19 pandemic, with passenger levels remaining 30% below those of 2019.
With the current high jet fuel prices and the looming threat of a cost-of-living crisis, many regional airports in Europe are facing a dual challenge of supply and demand shocks, posing an existential threat to their operations. The chief of the aviation industry emphasized the severity of the situation, stating that these airports are in a critical position.
Conversely, major airports such as Heathrow in the UK are experiencing a different issue. The airport’s chief financial officer, Sally Ding, highlighted the airport’s full capacity amidst a surge in demand for connecting flights due to the Middle East conflict. This spike in transfer passengers is expected to persist as geopolitical uncertainties continue to affect travel patterns.
Despite temporarily meeting the increased demand, Heathrow anticipates ongoing challenges with passenger numbers due to the prevailing uncertainties in the Middle East. The airport’s long-standing proposal for a third runway to boost capacity has been delayed by political debates, potentially leading to fewer options and higher costs for passengers and missed economic opportunities for the UK. Heathrow’s plan, which involves private financing and a significant expansion, aims to enhance connectivity and support the UK’s global links, pending regulatory and governmental support.
The airport expansion project also involves infrastructure changes, including a redesign of part of London’s M25 to accommodate the increased traffic. While a competing bid from the Arora Group offered a more cost-effective alternative, it was rejected in favor of Heathrow’s proposal. However, ongoing government reviews are causing delays in the decision-making process, impacting the airport’s growth plans.
