The reshuffle on the global aviation market is a euphemistic term for the sequence of events that we are dealing with after the outbreak of war in the Middle East. PLL LOT is surprisingly stable compared to its competitors, but dark clouds are gathering over the horizon. Reason? Drastically rising fuel costs, which may force the company to make painful optimization – reveals Fly4free.pl.
Despite the need to suspend flights to the key metropolises of the region – Riyadh, Dubai and Tel Aviv – and the delay in the start of the connection to Beirut, LOT did not record a drastic decline in its results. On the contrary – the national carrier uses its position as a transfer line.
We do not see a significant decline in interest in transatlantic flights. We benefit from the fact that we are a transfer airline, so the crisis in the Middle East means that we see a larger number of passengers, e.g. from India, Georgia or Armenia, who transfer in Warsaw to flights to the USA – explains Krzysztof Moczulski, LOT spokesman, in an interview with Fly4free.pl.
A similar situation can be observed on routes to Asia. The increased interest caused LOT to announce additional flights to Tokyo. Although similar interest is visible in the case of routes to southern Europe (due to adjustments to the holiday plans of Europeans who decided to choose geographically closer trips), LOT is not planning any additions to routes, among others. to Bologna, Malaga, Porto, Heraklion and Majorca. Why? The company wants to maintain high operational efficiency by increasing the number of spare machines.
The specter of more expensive aviation fuel in the “new reality”
However, the greatest threat to optimistic forecasts is not the lack of passengers, but the costs of aviation fuel. Unfortunately, hedging mechanisms are insufficient given the current market dynamics, and strong competition makes it impossible to simply pass on costs to ticket prices.
LOT has a prepared strategy if fuel prices remain at such high levels for longer. First of all, there will be operational optimization, so the company will look for savings within the company's processes. If this does not help, there will be adjustments to flight schedules. But instead of completely suspending routes, LOT may decide to operate less frequent flights on selected destinations and adjust the network by moving machines where profitability is highest.
If the current cost trends continue, it will be inevitable to adapt the connection network to the new realities, warns Moczulski.
Hard landing for travelers. Airline tickets are up to PLN 300 more expensive
The war in the Persian Gulf is disrupting the global economy. The aviation industry has already had a capsize. In Europe, the price of aviation fuel increased by over 100%, and in Asia – which imported even more fuel from the Middle East – by as much as 300%. Currently, jet fuel is two or even three times more expensive than the crude oil from which it is made. This is the largest disproportion in history.
ed. aw
