Aircraft fuel

In the previous episode, I have unraveled the logic behind airline ticket price volatility, why fares rise and fall dramatically, why Romania went from +60% to over -35% in less than three years, and what role is played by seasonality, competition and basic effects.

We promised to come back with more details about fuel; therefore, welcome back to The MacEN  Area, in part II, where we cover the topic of fuel in depth.

SHARP JUMP IN QUOTES: EXTREME VOLATILITY AND PRESSURE ON RATES

La 14 August 2026, the European jet price fuelhas reached1.293,25dollars per ton, the highest among the main regions, except for America of the South. The European level was above the global average of 1.254,93 dollars per ton, and the North American price, of 1.262,49dollars per ton.

The recent trend has been particularly steep. The price has risen:

An annual increase of over 80% means that a European airline currently purchasing fuel at the market price is facing a costalmost double compared to that of summer 2025. The effect, however, varies between operators, depending on supply contracts, procurement policyhedging, the fleet efficiency and the airports used.

PETROL BRENT VS JET FUEL

WHEN DEMAND TAKES OFF FASTER THAN SUPPLY

This is one of the least understood features of the energy market: the supply of refined products does not adjust immediately.

A refinery does not produce aviation fuel exclusively. From the same oil barrelgasoline, diesel, kerosene, fuel oil and other products are produced, and refineries optimize their output according to available margins.

Summer complicates things even more. In the summer season, demand for gasoline, diesel and jet fuelcan increase simultaneously. The capacity of the refineries competes between products, and jetfueltries to win that competition through higher prices.

These include:

AN EXPENSIVE HURDLE TO SUPPLY EUROPE

The price of aviation fuel varies significantly between regions.

Looking at the table, we see that Europe was paying, at14 August 2026, approx.30 dollars/ton more than North America and by ~95dollars/ton more than Asia.

These differences arise because Europe imports a large part of its jet fuel needsfuel. And for a supplier from the Middle East or Asia to redirect a cargo to Europe, the European price must cover: the quote from the origin region, maritime transport, transport insurance, and the opportunity cost of not selling elsewhere.

If demand from Asia or America is strong, Europe must offer a higher premium. And that is exactly what happened in the summer of 2026.

THE EVENTS AT SOL AFFECT THE FUEL PRICE

Oil-producing region tensions affect more than just crude oil prices. They simultaneously disrupt multiple links:

For aviation, the geopolitical effect is phased because more expensive fuel, together with longer flights, creates the perfect storm that quickly turns into a significantly higher operational cost, even if the barrel price hasn't moved dramatically.

The market prices in risk before disruptions become reality. A geopolitical risk premium is factored into jet pricesfuelby anticipation, as long as the estimated risk is high, the market will price in this premium even before deliveries are actually interrupted.  

EMERGENCY VEST

Fuel is one of the largest expenses for an airline. IATA estimates that its share in the industry's operating costs will rise to 31.4% by 2026. Therefore, nearly one third of an airline's operating expenses could come from fuel.

However, the price increase is not passed on mechanically and immediately to the price of each ticket. The process has several stages.

Amortizer 1: Absorption through margins
When fuel prices suddenly rise for a few weeks, companies can temporarily absorb the cost by reducing their profit margin. They will not increase ticket prices overnight, as in the short term they prefer to accept lower profits rather than lose demand.

However, operators’ ability to absorb a persistent price increase is limited. If the price stays above 1,300 dollars per ton, companies will gradually try to recover costs through higher fees, extra charges, or fewer promotions.

Shock absorber 2:Hedgingfinancial
Many airlines buy fuel in advance or use financial instruments to fix the price. Essentially, hedgingin aviation, it is a contract and functions as afinancial insuranceagainst the uncertainties that may arise when fuel prices are very volatile. Worldwide, approximately one third of the estimated consumption for 2026 was hedged throughhedging.

Hedgingit reduces the immediate effect, but has two important limitations:

IMPACT DIFERIT

And yet, not all operators are affected in the same way. The same price of 1.293,25 dollars/ton produces different effects for different operators, depending on:

That is how a company with efficient aircraft, a high occupancy rate andhedgingfavorable can maintain competitive rates longer than one with an older fleet and high exposure to the spot market.

FLIGHT PLAN FOR THE COMING MONTHS

In the short term, risks remain skewed toward high prices and heightened volatility.

O scădereis possible if oil prices fall, refineries increase their production, importsse balancesă and the seasonal demand decreases after summer. However, the jet price fuelwill not necessarily decrease to the same extent asBrent if the refining margin remains high.

In the base scenario, European fuel could remain expensive and unstable in the coming months. In the adverse scenario, new production or transport disruptions could push the price up again.

For airline tickets, the most likely effect is a gradual one. Already sold fares will not change, and operators protected throughhedgingcan delay the price increases. However, if the price remains near or above the current threshold, the pressures will become increasingly visible through fewer promotional offers, higher booking prices during busy periods, and increased fares on routes with limited competition.