EU Affirms Airlines Must Compensate Passengers for Fuel Price Related Cancellations

European airlines will be required to continue providing reimbursements to passengers for flight cancellations attributed to elevated jet fuel costs, according to Apostolos Tzitzikostas, the European Union’s Sustainable Transport and Tourism Commissioner. The statement, delivered in an interview with the Financial Times published on Thursday, underscores the regulatory position that fuel price volatility does not constitute extraordinary circumstances under EU passenger rights legislation.

The aviation sector across Europe faces mounting pressure from surging jet fuel prices, whilst industry experts and government officials warn that kerosene shortages could materialise within weeks should the current disruptions at the Strait of Hormuz persist. Tzitzikostas sought to temper such forecasts, suggesting that predictions of jet fuel shortages arriving in June may be overstated. He cautioned against disseminating alarmist messages as the region approaches the peak tourism season.

The commissioner referenced the European Union’s coordination framework established last month, designed to ensure jet fuel and diesel availability across all member states during this period of significant supply disruption. He expressed confidence that this mechanism would enable the bloc to navigate the current challenges.

Tzitzikostas was explicit in his assessment that elevated jet fuel prices do not qualify as extraordinary circumstances that would exempt carriers from their reimbursement obligations. He stated that cancellations made for reasons related to fuel pricing would require airlines to provide full passenger reimbursements, as such cost increases fall outside the narrow definition of extraordinary events under EU regulations.

The regulatory stance comes as Lufthansa Group, Europe’s largest airline operator, disclosed earlier this week that it anticipates an additional $2 billion in costs during the current year due to the jet fuel price surge. The carrier directly attributed the price escalation to supply shortages resulting from the closure of the Strait of Hormuz, which has severely constrained kerosene availability.

The conflict in Iran and the subsequent closure of the Strait of Hormuz have created substantial constraints on Europe’s jet fuel supply infrastructure. Benchmark jet fuel prices have climbed above $200 per barrel, reflecting the acute supply pressures. European imports of jet fuel have been severely curtailed by the conflict, whilst domestic refining capacity has diminished over nearly two decades through a combination of permanent closures and conversions to biofuel production facilities.

The situation presents a significant challenge for European carriers, which must balance operational viability against regulatory compliance. The Commission’s position effectively places the financial burden of supply disruptions and price volatility on airlines rather than passengers, potentially compressing margins further during an already difficult operating environment.

Market participants will be monitoring developments at the Strait of Hormuz closely, as any prolonged closure or escalation could exacerbate supply constraints and drive fuel costs higher still. The European Union’s coordination efforts may prove critical in determining whether the bloc can avert the kerosene shortages that some analysts predict could materialise in the coming weeks.