China increased 2,900 flights to Europe amid fuel shortages

According to analysts, in the context of the Middle East conflict remaining tense and the world facing a shortage of jet fuel, the increase of nearly 2,900 flights to Europe during the summer peak gives China a great competitive advantage over global airlines.

Unlike many Western airlines, Chinese airlines can fly directly through Russian airspace to Europe instead of taking detours. Thanks to that, using the services of Chinese airlines will help tourists fly faster, flights save more fuel because they do not have to fly through Middle Eastern airspace.

According to data compiled by aviation analysis company OAG (UK), the number of flights to Europe operated by Chinese airlines increased by nearly 2,900 flights, of which the main carrier Air China added 1,120 flights, China Southern Airlines added 839 flights and China Eastern Airlines added 654 flights.

Smaller carrier Hainan Airlines also plans to increase the number of flights between China and Europe, with its announced flight schedule covering the period from late March to October.

Airlines also expect to establish new routes between China and Europe, according to OAG. One flight route can operate many flights.

Russia has banned many European and North American airlines from using its airspace due to sanctions from these countries related to the fighting in Ukraine. This has brought great advantages to Chinese airlines on China-Europe routes.

In parallel with opening more flights, China’s luxury hotel industry is also opening up new business directions to serve the increasing number of business travelers and international visitors who prefer high-end accommodation. International visitors often spend more than domestic visitors, except for the rich Chinese group. The majority of visa-free visitors to China come from developed countries with much higher costs of living.

According to Associate Professor Yong Chen of EHL Hotel Business School (Switzerland), even with normal spending, this group of guests can still create a significant source of revenue for Chinese businesses.

The Hongkong and Shanghai Hotels Group – which owns and operates The Peninsula hotel chain with facilities in Beijing and Shanghai – has recorded a significant increase in international visitors, thanks to China’s visa-free policies.

At the Peninsula Shanghai hotel, cancellations from guests from Gulf countries due to flight restrictions were offset by an increase in luxury travelers from other countries coming to China on visa-free status.

At The Peninsula Beijing, the guest structure is currently divided equally between domestic and international guests. The group said it is recording a positive mix of high-level business delegations and returning visitors from the US, UK, Australia and Mexico.

In addition to the problem of having to avoid Middle Eastern airspace and flying detours leading to more fuel consumption and increased costs, many airlines around the world also face the problem of fuel shortages. Jet fuel prices in the US have doubled in just a few weeks since the Middle East conflict broke out on February 28 and the region has tightened supply, raising concerns about not having enough fuel to fly.

According to the US Jet Fuel Index, prices have increased from about $2 to double per gallon (as of March 27). Airlines warn that stocks could run out in the coming weeks, increasing the risk of ticket prices rising and many flights being canceled.

Airlines are starting to adjust. United Airlines CEO Scott Kirby said the airline will cut the number of flights by 5% in the near future as fuel costs increase sharply. He also warned that if prices remain high, the additional fuel cost compensation alone will increase by 11 billion USD yearly. The airline is also narrowing operations during off-peak periods, stopping some international routes, including to Israel and Dubai, due to the Middle East conflict.

Delta Air Lines CEO Ed Bastian said the increase in fuel prices caused the airline’s costs to increase by $400 million in March alone. The airline had to quickly pass on this increased cost to passengers through ticket prices. American Airlines also expects fuel costs to increase by $400 million in the first quarter.

The impact does not stop at US airlines. Leaders of European airlines, including CEOs of Lufthansa and Air France-KLM, warned that if the Middle East conflict prolongs, it will push up ticket prices and put pressure on already limited fuel supplies. Some European aviation experts also warn that flight fuel could run out if the disruption is prolonged.

Air France-KLM, France’s largest airline, plans to increase long-haul ticket prices. Cathay Pacific (Hong Kong, China) and some Asian carriers are increasing fuel surcharges. The joint national airline of Sweden, Denmark and Norway – SAS – said it will cancel about 1,000 flights in April due to rising costs. Qantas of Australia and Thai Airways of Thailand are also adjusting ticket prices and flight schedules.

Aviation fuel is one of the largest expenses for airlines, especially volatile due to thin inventories and specialized storage requirements. Therefore, jet fuel prices are susceptible to strong fluctuations when supply is tight.

CEO in charge of refining, petrochemicals and oil products at US quotation company OPIS, the Middle East exports about 1.1 million barrels of jet fuel per day, equivalent to 15-17% of total global demand. Much of the supply is shipped through the Strait of Hormuz, where tanker traffic has plummeted amid rising regional tensions. The Strait of Hormuz is a waterway between Iran, UAE and Oman, transporting about 20 million barrels of oil per day (when there is no conflict) and about a fifth of global liquefied natural gas and significant quantities of jet fuel, according to Fox News.