British Airways warns all airlines will have to increase fares as a result of Iran war

The British Airways boss has warned all airlines will have to increase fares to combat rising fuel costs as a result of the Iran war.

Luis Gallego, chief executive of the airline, said the business is "managing the uncertainty" caused by increased fuel prices.

He said British Airways would take "necessary action on yields, costs and capacity", but admitted all airlines will "need to increase fares" to "mitigate the impact" of rising jet fuel prices.

The war against Iran has resulted in the closure of the Strait of Hormuz and caused rising fuel costs across the globe.

Jet fuel currently comprises a quarter of costs of British Airways.

Mr Gallego said: "Whilst the impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated, we are confident in our business model and strategy."

Shares in International Air Group (IAG), who also operate Iberia and Aer Lingus, fell by four per cent after it said it expects fuel costs to reach £8billion this year, impacting its full-year profit and free cash flow.

The British Airways boss said there was less jet fuel coming from the Middle East, but does not believe there will be "any interruption for the summer".

He said the firm had been "planning for situations like this for many years", and had previously invested in its own jet fuel supply at its "main hubs".

He said "markets like Asia that were weaker" in terms of fuel supplies are "building up reserves".

IAG said about three per cent of its capacity was "exposed to the Gulf region" at the start of the war on February 28, mostly with British Airways flights.

The company has now boosted capacity at destinations including Bangkok, Singapore, and the Maldives.

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It has also has added additional flights for destinations with higher demands such as India and Nairobi, Kenya.

Middle Eastern carrier Emirates said on Thursday it was still the "world's most profitable airline" despite the disruption caused by the Iran war.

And Air France-KLM had cut its 2026 outlook, saying higher fuel prices would expand its fuel bill by more than a third.

The European Union Aviation Safety Agency has cleared the way for the possible of US jet fuel in the European Union to make up for the potential shortage caused by the war.

Jet A, a US-produced type of fuel, is not currently used in Europe, which operates on a fuel called Jet A-1.

In new recommendations, EASA said: "A potential introduction of Jet A in Europe or in other parts of the world would not generate safety concerns provided that its introduction is properly manage."

The International Energy Agency warned on April 16 that Europe had six weeks of jet fuel left before shortages begin.

Transport Secretary Heidi Alexander has insisted summer holiday plans will not face major disruption because of jet fuel supply issues and that jet fuel had been imported from the US.

An EU commission spokesman said there was no concrete evidence of jet fuel shortages at the moment.