The travel industry is facing significant economic challenges just before the start of the peak summer travel season. A recent industry study by the credit insurer Allianz Trade forecasts drastically rising ticket prices and a reduction in flight availability for the coming summer. The main reason for this development is the tense situation in the Middle East, which has led to a massive shortage of kerosene on the global market. In particular, the import of aviation fuel to Europe is jeopardized by the instability in the crisis region and the restricted usability of important trade routes such as the Strait of Hormuz.
While long-haul destinations in Asia and Australia are becoming unaffordable for many travelers due to the loss of transfer capacity in the Persian Gulf, increased demand for southern European destinations is emerging. However, experts warn that inflation and weak consumer sentiment in Germany could lead to a portion of the population foregoing vacations altogether, which will not necessarily benefit domestic tourism.
The impact of the kerosene shortage on flight operating costs
The supply of kerosene currently poses the greatest operational risk for European aviation. Since Germany, along with the UK, is one of the world's largest importers of aviation fuel, disruptions in supply chains hit domestic airlines particularly hard. Current capacities from the US are far from sufficient to compensate for the shortfalls from the Middle East. Allianz Trade points out that national stockpiles are dwindling at an alarming rate, making the risk of a physical fuel shortage in early summer a real possibility.
Even in an optimistic scenario that anticipates a rapid easing of the geopolitical situation, it is estimated that it will take three to six months for refinery utilization and production rates in the Middle East to return to normal levels. For airlines, this translates into long-term uncertainty in their calculations. To offset the increased procurement costs, numerous airlines have already reacted by reintroducing separate fuel surcharges. These surcharges are often adjusted at short notice and directly impact the final price for consumers, significantly reducing planning certainty for vacationers.
Structural price increases and additional fees
Besides fuel costs, other factors are also driving up prices. According to market analysis, international airfares have already risen by 5 to 15 percent. There is currently no end in sight to this upward spiral. Airlines are also increasingly monetizing ancillary services to secure their margins in a challenging environment. Higher fees for checked baggage, seat reservations, or in-flight meals are now standard pricing practices.
Experts have observed that the route cancellations implemented so far are less a systematic crisis response and more a case of targeted network optimization. Airlines are concentrating their limited resources on the most profitable routes, which in turn reduces capacity on less frequently traveled routes and leads to disproportionate price increases there. For travelers from Germany, this means that flying is not only becoming more expensive but also less flexible, as alternative flight connections are increasingly disappearing from schedules.
Shifts in tourist demand within Europe
Due to the increased cost of long-distance travel and the loss of entire regions as destinations, tourist flows are shifting dramatically within the European continent. With the Persian Gulf currently operating only to a limited extent as a hub for flights to the Far East and Oceania, many consumers are seeking closer alternatives. This is particularly benefiting the classic holiday destinations in southern and southwestern Europe. Booking data shows a significant increase in demand: Spain has recorded a 32 percent rise compared to the previous year, while Italy, Greece, and Portugal have seen increases of around 20 percent.
This focus on the Mediterranean region, however, leads to another problem: the capacity limits of accommodation and infrastructure in the destinations. High demand, coupled with rising operating costs for hotels and local service providers, is causing a noticeable increase in the prices of package holidays in Europe. This means that the cost advantage of shorter flight distances is partially offset by higher costs at the holiday destination.
Consumer restraint and the state of domestic tourism
Despite the shift from long-distance travel to short- and medium-haul European routes, an automatic boom for the German tourism sector is not guaranteed. The general economic situation, characterized by inflation and high energy prices, is weighing on consumer confidence. Allianz trade expert Maria Latorre emphasizes that weak consumer sentiment is leading many people to completely reconsider or cancel their travel plans.
While domestic tourism might be perceived as a cheaper alternative in this situation, it is itself struggling with the effects of inflation. Rising costs for personnel and food in the hospitality industry, as well as high energy costs for hotels, are forcing domestic providers to raise prices. This diminishes the price appeal of holidays within one's own country compared to those abroad. It is becoming clear that the crisis in air travel extends far beyond the airlines themselves and is affecting the entire tourism value chain.
Long-term perspectives for the aviation market
Analysts predict that the effects of the current crisis will persist well beyond this year's summer holidays. Structural changes in energy supply and the reorganization of global flight routes demand a high degree of adaptability from market participants. Dependence on kerosene imports from politically unstable regions remains a strategic weakness for European aviation.
For the end consumer, this means a permanent end to the era of extremely cheap airfares. The combination of resource scarcity and economic instability is forcing the industry to price its services more realistically. The coming months will show how resilient the travel market is to these pressures and to what extent consumers are willing to bear the higher costs of their mobility. Relief can only be expected once supply chains have stabilized and alternative supply routes have been established – a process that will require time and significant investment.