Vacationers choose to train or stay overnight amid airline jet fuel crisis

Europe’s jet fuel crisis threatens peak travel season, but consumers are instead looking to vacation closer to home to save money and avoid flight disruptions.

European airlines have been hurt since the start of the war between the United States and Iran, grappling with soaring fuel costs and jet fuel shortages while the Strait of Hormuz remains closed. The region typically imports 75% of its jet fuel from the Middle East.

Jet fuel prices rose 103% month-on-month by the end of March, according to the International Air Transport Association.

Fatih Birol, head of the International Energy Agency, warned in April that Europe would run out of jet fuel in the coming weeks unless it found alternative sources of exports.

Fuel costs account for about 20% to 40% of an airline’s operating costs, and many airlines are now covering these costs by increasing surcharges or canceling unprofitable routes. German airline Lufthansa, Scandinavian airline SAS, Dutch and French airline Air France-KLM Royal Dutch Airlines This also includes airlines that have suspended flight operations.

British holidaymakers are now considering destinations in southern Europe closer to home, such as France, Spain and Greece, and considering alternative travel options such as rail, as the Iran war has made long-haul flights more risky.

“I think the trend we’re seeing in Europe this summer is that people are going to be vacationing at home.” ryanairCEO Michael O’Leary told CNBC’s Ben Boulos at the Norges Bank Investment Management Conference in Oslo in April.

“People are going to be more and more determined and looking to book Portugal, Spain, Italy and avoid traveling to the Middle East and long distances…We’re seeing people switch from traveling to the Middle East and long distances to short distances,” Mr O’Leary added.

Eurostar tickets to France purchased by UK residents jumped 42% month-on-month in April, and 25% year-on-year, according to travel booking platform Trainpal, which was shared with CNBC. Just over half of the tickets booked by Britons were for travel beyond 30 days from purchase.

The data also showed that Britons’ plans to travel by train across Europe were boosted, with train ticket sales in France up 98% year-on-year, 61% in Spain and 92% in Italy.

Álvaro Ungurean, Trainpal’s European sales director, said: “It’s no surprise that the discourse around jet fuel shortages is driving more Eurostar bookings and more UK travel by train to other parts of Europe.”

“Thankfully, rail travel remains very accessible to mainland Europe for UK travelers this summer, and we are actively encouraging those concerned about flight cancellations and international disruption to consider rail travel as an alternative option.”

Allianz Trade said in a study published in April that airlines face stiff competition from rail this summer, especially since European rail has a history of consistently transporting more passengers per year than airlines.

The study warned that Europe is one of the “most structurally exposed regions” to the jet fuel crisis, as only around 50% of kerosene, a type of jet fuel, is produced domestically.

Meanwhile, between 2014 and 2024, railways transported 81.2 billion passengers, while airlines transported 8.9 billion passengers, according to Allianz.

“The big game changer now is that airline ticket prices are skyrocketing and gas prices are skyrocketing,” said Ano Kuhanathan, head of corporate research at Allianz.

He said British travelers typically drove to France and other nearby European destinations when diesel prices were very low and cheaper than trains.

“But now with diesel and petrol prices going up, I think there will be a little more interest in rail travel,” he says.

He added that the possibility of flight cancellations is also reinforcing travelers’ decision to choose rail.

“If you decide to travel abroad and for some reason your flight back is cancelled, you’re on your own, you’re probably stranded in a foreign country and you have to look for accommodation. So obviously I think all of this is weighing heavily on people’s thinking.”

tourism company TUI group A strong trend of consumers booking last-minute trips, particularly to Western Mediterranean countries, has been reported this year, with Spain, the Balearic Islands, the Canary Islands and Greece expected to be the most popular destinations this summer.

Meanwhile, Allianz Group said its booking tracking survey showed Spain was up 32% year-on-year, while Italy, Greece and Portugal were up 20%.

Mr Kuhanathan explained that British travelers have historically preferred southern Europe and the Iran war would “reinforce” this pattern. “Obviously it’s the long-haul flights to Asia and maybe Latin America that are going to take some strain.”

Stephen Furlong, a senior transportation and logistics analyst at Davis, previously told CNBC that airlines are responding to rising fuel prices by “flying less and flying more because some routes don’t make sense with high oil prices.”

Mr Furlong said customers may choose to holiday closer to home as uncertainty continues.

“Probably in the short term, there will be increased demand for leisure travel to regions closer to home, such as Spain, Portugal and France, rather than the eastern Mediterranean,” Furlong said.

With airfares rising globally, families in the UK and Europe are thinking about their finances before heading out on a trip abroad.

Allianz’s Kuhanathan said “economic uncertainty,” worries about the job market and AI are all contributing to travelers seeking more economical travel this year.

Some Brits may choose a staycation or not travel at all. “Domestic tourism will increase a bit more. This is already a historical trend and in the current context it can definitely be strengthened,” Kuhanathan said.

Earlier this month, Airbnb searches for UK stays rose 15% year-on-year, according to data the vacation rental platform shared with CNBC.

Regions such as Northumberland, Pembrokeshire, Herefordshire, Gwynedd and the Derbyshire Dales are among the top 20 most booked UK destinations for the May bank holiday.

Lisa Marçais, General Manager, Nordics and EMEA airbnbsaid there was a clear increase in demand for holidays in the UK during the spring and summer seasons, which are generally more accessible and more cost-effective.

“If you are less confident about the future of the economy, holidays will become more and more expensive. Perhaps you will decide to save money for a rainy day instead of vacationing in the south of Spain,” Kuhanatan added.