Lufthansa Group has announced a swathe of cancellations across its hubs at Frankfurt and Munich as it looks to reduce fuel consumption amid sharply higher prices. The German group will axe a total of 20,000 services from the two hubs in a bid to save 40,000t of jet fuel, the price of which has roughly doubled since the start of the Iran conflict. It notes that while routes are being axed from Frankfurt and Munich, the hubs of its subsidiary airlines in Zurich, Vienna and Brussels will have their schedules expanded as part of its plans to consolidate its European network. "Passengers will therefore continue to have access to the global route network, particularly long-haul connections. However, due to the increase in jet fuel prices, this will be achieved significantly more efficiently than before," Lufthansa says. Some cancellations, such as those from Frankfurt to Bydgoszcz and Rzeszow in Poland and Stavanger in Norway, are already reflected in the schedules. Medium-term route plans for the coming months are still being worked out and will be published in late April or early May. "This will include optimisations to the short-haul offering for the entire summer season, thereby ensuring schedule stability for the flight plan period," says the group. Lufthansa has long complained that high taxes and fees to operate in Germany have made its routes to, from and within the country vulnerable to closure, with implications for connectivity and the economy. By its own estimates, costs have broadly doubled since 2019, and many airlines have left the domestic sector. Cirium data shows that Lufthansa’s weekly seat capacity in Germany was down by around a tenth this August compared with pre-pandemic levels, with the bulk of losses being in the domestic segment. The group has highlighted that the financial performance of its mainline German operations has lagged the rest of the group. That led chief executive Carsten Spohr to declare on a 6 March results call that Lufthansa "must become more profitable", while acknowledging that a turnaround plan was beginning to have a positive impact. On 16 April, the carrier announced that it was discontinuing the operations of its CityLine subsidiary as part of "accelerated capacity and fleet measures", while bringing forward the retirement of some older aircraft. The Star Alliance carrier describes the measures as an "initial package" that would seek to reduce fuel burn. In its latest statement, Lufthansa adds that it expects a "largely stable" fuel supply for the summer and is "pursuing a range of measures to this end", including the physical purchasing of jet fuel and hedging. The group reported in March that it was 81% hedged for its full needs across the year.

Carriers in the USA are not in danger of running out of jet fuel amid the conflict over the Strait of Hormuz in the Middle East, in the view of United Airlines chief financial officer Michael Leskinen. The price of jet fuel – not availability – is the central issue, Leskinen said on 22 April during an earnings call. "We don't see a lack of availability being an issue at all in the US – it's a price issue," Leskinen says. "However, even in Europe and Asia, as we sit here today, we think it is a price issue, not an availability issue." He adds that United has "really good visibility for four or five weeks" and is seeing the price of jet fuel "rise much more than the price of Brent", which will lead to "a rationing function" in aviation. "That means there will not be spot outages, but we're watching it closely. The longer the strait remains closed, the more that is of risk." United continues to monitor "the massive run-up in fuel prices created by the conflict in Iran". Leskinen notes that United in the first quarter "delivered resilient results" despite "a $340 million higher fuel bill" in the period. The US major's first-quarter operating profit came in at $997 million, up from $607 million in the same period last year. "We are managing the business with the expectation that jet fuel remains elevated in the medium term," he says.

Alaska Air Group hopes, in the long run, to tap the Singapore jet fuel market as a "nice, stable source of much-lower-cost fuel than Gulf Coast", despite current supply issues in Singapore's market. "We were doing 20% of our fuel from there [before the Iran war], and we like the idea of moving that up materially, maybe even to 30% or 40% over time," said Shane Tackett, Alaska Air Group's chief financial officer, on 21 April during an earnings call. Singapore is not an oil producer, but its role as a trading, storage and blending hub makes it one of the most influential energy centres globally, according to a 16 February S&P Global report. Singapore's refining capacity has remained at 1.27 million barrels per day since 2022, as the largest refining center in Southeast Asia, operated by three major players: Aster, ExxonMobil and Singapore Refining, the report adds. Jet fuel and kerosene are the largest components in refinery output, followed by gasoline and diesel. Singapore jet fuel prices have surged since the outbreak of the USA and Israel's war against Iran on 28 February. The discussion about Singapore-sourced fuel during Alaska's earnings call was prompted by Atul Maheswari, an analyst at UBS Securities, who had been "reading some energy reports that global refining capacity is basically down 6-8% since the war started". He asks: "How long can this disruption persist, in your view, before it causes real jet fuel availability problems in markets like Singapore, where you source from?" While noting that Alaska is "obviously not the absolute expert on… global oil supplies or refineries", Tackett notes the company does "understand our markets really well and our supply chain really well". He says: "We don't foresee any disruption anytime in the foreseeable future across our network", explaining that Alaska is "not so sourced out of Asia or Singapore into any of our markets". "And if we need to supply Hawaii, as an example, from the domestic market, that is totally within our ability to do." Alaska's hope is that in the long term, the situation normalises and Singapore refineries "come back on strong" and "those costs return to where they were pre-conflict". A resolution to the conflict between the USA and Israel and Iran remains uncertain. US vice-president JD Vance's trip to Pakistan for a second round of negotiations with Iran has been put on hold after Iran did not respond to American positions, according to a 21 April update by The New York Times, which cited an anonymous source. Cirium has not independently verified that report. Outside of the current crisis, a more long-running issue for airlines operating on the US West Coast is constraints in the supply of Jet A, a type of jet fuel that has faced tighter availability and higher price volatility due to reduced local refining capacity and constrained logistics. Tackett says that "from an industry perspective, we need to work on the West Coast Jet A supply issue". "Long term, there's just increasing desire to fly and demand for today, and we don't have the pipeline infrastructure, refinery infrastructure that the Gulf Coast or the East Coast has," Tackett says. "That'll take time, but it's something that we're focused on, and I think other airlines are starting to focus on along with us." He also says that Alaska is "working on building infrastructure here in Seattle to be able to take tankered fuel into Seattle, which would be a game changer for us in terms of the supply chain." Alaska Air Group is headquartered in Seattle, Washington. He adds: "There's a lot of interest in ultimately getting that work done. These are long tail investments, though, and so it's nice to talk about them, but it's probably a ways away before we structurally are able to begin to resolve this." He reminds analysts that Alaska has had a "10-15% fuel disadvantage structurally for our entire life out here on the West Coast". "So this isn't new for us, and we've, even with that, been able to outperform most of the industry on margins over time," he says. Ultimately, Alaska's chief executive Ben Minicucci thinks Alaska's growth into more of a global carrier – it has acquired Hawaiian Airlines and next week plans to launch its first-ever flights to Europe – positions it better to weather market shocks like the current fuel price uncertainty. Brandon Oglenski, an analyst at Barclays, asked on the earnings call how Alaska is positioning its business "to potentially deal with maybe a higher differential on the West Coast". "If you would have asked me three years ago with a standalone Alaska, it would have been a lot more difficult for us," Minicucci says. "But now... we're flying to different geographies, and we have the airplanes to access any part of the world today." He adds: "I'm not looking at this through rose-coloured glasses. I know that every year there's something happening in the world where you have to pivot and move the business somewhere else. And I think we're becoming good at it."