EasyJet: We’ll cut fares when Strait of Hormuz reopens
The boss of easyJet has said he would consider cutting fares again if fuel prices crashed when the Strait of Hormuz reopened.
It comes after the budget carrier said it would raise prices this summer after the Iran war saw a jet fuel supply crunch spark a surge in costs and fears of shortages in Europe.
But Kenton Jarvis told The Mail on Sunday that the extended closure of Hormuz meant there was ‘a lot of backed up production that will start flowing’ from the region when the conflict subsides and shipments are again allowed through the waterway.
He said: ‘When the Strait of Hormuz reopens there is going to be an awful lot of supplies that will start shipping out of there.’
Coupled with new sources from Norway and Nigeria, which have boosted production to replace lost Gulf supplies, Jarvis said the jet fuel market was likely to experience a ‘rebalance’ that could lead to a glut.
When asked if easyJet would cut ticket costs for passengers if its fuel bill was lowered by a global price crash, the chief executive replied: ‘Yes’.
Looking ahead: The boss of easyJet has said he would consider cutting fares again if fuel prices crashed when the Strait of Hormuz reopened
He said: ‘The purpose of easyJet is to make flying affordable and accessible and easy for as many people as possible. We will always have attractive fares. The reality is that benefit would end up being passed back over time.’
Jarvis also indicated that once the conflict was over, global fuel supplies were likely to remain higher in the long term as production brought online in the war would not be turned off.
‘If additional oil fields and wells have been opened in Nigeria, in Norway and in the North Sea, no one’s going to shut them down two years later. It’s going to bolster the supply globally,’ he said.
His comments came after easyJet reported a £552 million loss for the six months to March, wider than the £394 million loss it posted a year ago, which included what it described as an ‘unexpected’ £25 million rise in its fuel costs when prices leapt on the Middle East conflict
The war has seen jet fuel costs rise more than 80 per cent since late February, forcing airlines to raise fares and cancel flights.
But this month rival carrier Ryanair said summer airfare rises were fading as travellers put off booking trips on fears of fuel shortages and the effect of inflation on household budgets.
The airlines have gone to great lengths to assure fliers that there is no threat of fuel shortages in a bid to entice back demand during the peak season.
But the outlook for the sector remains clouded with Ryanair having suspended its profit guidance for the rest of the year, while easyJet said there was ‘uncertainty’ on fuel costs and demand as a result of the war.
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