Aviation industry looks skywards as leaders fly in for Rio summit

Many big carriers hedge most of their fuel supply, insulating them from the price shock. But no analyst can confidently forecast the cost to airlines, and the amount that customers will stomach in a prolonged war. EasyJet’s chief executive, Kenton Jarvis, admitted recently that his airline had suspended hedging due to the volatility of the fuel price which he said “bumps up and down depending on what [Donald] Trump has for breakfast”.

A current industry subplot is who might yet have easyJet for breakfast, its tumbling share price attracting a takeover bid from the US private equity firm Castlelake, potentially alongside another European airline. EasyJet is not part of the Iata world, predominantly the legacy airlines, national carriers and long-haul operators whose fares may be more elastic than airlines built on a short-haul budget model. But others might likewise be swallowed up, or worse.

EasyJet has become a takeover target. Photograph: Agencja Fotograficzna Caro/Alamy

The US-Israel-Iran war has affected some of the biggest global players: the Gulf carriers whose geography, deep pockets and rapid growth had reshaped how and where intercontinental travel takes place.

Industry observers are watching keenly to see how they respond, having seen operations completely grounded in the Middle East when war broke out in late February, with hub airports hit by drones and airspace closed. Emirates, the host airline for Iata in Dubai in 2024 and one of the most powerful movers and shakers, will be an unusually quiet presence in Rio, its chief executive absent.

Conversations about the industry’s environmental impact are likely to play an even smaller role in airlines’ thinking this year – although, as ever, those pondering the accounts have a congruent interest in cutting fuel costs per passenger. The last prolonged step change in oil prices in the 2000s helped drive orders for new, more efficient planes. But flight numbers keep growing faster than efficiency, growing aviation’s carbon footprint remorselessly.

Sustainable aviation fuels [SAF] remain on the agenda in the conference halls, although perhaps with vanishing faith from proponents. The director general of Iata, Willie Walsh, who browbeat Iata members to get on board with SAF as the only viable solution, has since turned his invective on governments for imposing mandates while production has faltered.

The ex-British Airways boss has also announced his departure from the Iata post he has held since 2020 and is due to take over as the boss of India’s fast-growing budget carrier Indigo – an airline that has just axed its direct Delhi-Manchester route citing high fuel costs.

Iata has yet to confirm if a successor will be announced in Rio, or take their bow next year. But after months of fresh crisis, more of its airlines still believe they will have a next year.

Flights to the Iata summit were provided by Iata and Latam airline