LONDON, June 3 - The International Air Transport Association's head of fuel warned that wide swings in the jet fuel market have delivered significant blows to many airlines, and a portion of carriers lack the capacity to hedge their fuel exposure, according to remarks made on Wednesday.
Speaking at the S&P Global Energy Middle East Petroleum and Gas Conference, Daniel Chereau said airlines that have developed more elaborate hedging programs enjoy some protection, receiving "a bit of a cushion" when prices move sharply. However, he added that the surge in refinery profit margins for jet fuel - commonly referred to as crack spreads - has been detrimental to the airline industry.
Data referenced by Chereau show that in North West Europe the jet fuel crack spread reached an all-time high of over $121 per barrel in March. That represents a sharp rise from roughly $30 per barrel recorded before the outbreak of the Iran war in late February.
Chereau highlighted the role of the Middle East in global jet fuel supply, and said the region's ability to produce and export the fuel has been heavily restricted. He attributed those constraints to the effective closure of the Strait of Hormuz and to attacks on energy installations, factors that have curtailed flows of jet fuel from a major producing region.
The IATA fuel chief also pointed to emerging signs of demand destruction within aviation, though he stressed this has not necessarily been driven directly by the fuel price itself. Instead, demand has been reduced when airlines cancel flights, and in some areas airports have experienced short periods when fuel supplies ran dry.
Chereau cautioned that such incidents could become more common, and that the longer the conflict endures, the greater the potential for passenger-driven demand destruction. He did not identify specific airlines or airports that have been most affected.
Contextual note - The comments reflect observations about market conditions and operational impacts shared at a sector conference. They describe patterns and risks as reported by the IATA fuel head, without naming individual carriers or locations beyond the regions discussed.