According to various estimates, the cost of fuel accounts for 25-35% of airline ticket prices. It is impossible for this increase to not affect flight costs; the question remains how much of this rise will be passed on to ticket prices.
The rise in prices can be attributed to soaring oil prices due to the conflict in the Middle East. Globally, jet fuel prices have risen significantly more than in Russia, by 60-120%. The steepest increases have been observed in Europe and Asia. The International Energy Agency (IEA) has even suggested a potential fuel shortage in Europe, and Bloomberg has warned of an increase in flight cancellations.
According to the Ministry of Energy, Russia fully meets the domestic demand for aviation fuel, and there are no risks of a shortage in the domestic market. Production capacities and stockpiles ensure that the needs of air carriers are met consistently. As for price volatility, it is market-driven and linked to external conditions. Currently, the situation does not require urgent regulatory measures, officials are confident.
In Russia, there is a damping mechanism in place for aviation kerosene. This is similar to the damping mechanism for automotive fuel, but with one significant difference: it is paid to the carriers—airlines—rather than fuel producers. The government compensates 65% of the difference between the export price of aviation kerosene and the fixed price set by the government for the domestic market. The Ministry of Energy clarified that this damping mechanism currently helps maintain final prices for aviation fuel at a relatively low level.
However, this compensation is not complete. Therefore, while the cost of aviation kerosene is rising slowly and is significantly lower than in the rest of the world, it is still rising. Other factors contribute to this increase as well. As noted in a conversation with "RG," Yuri Stankevich, Deputy Chairman of the State Duma's Energy Committee, pointed out that there is an indirect influence from global market conditions: aviation fuel is a traded product, and global oil and petroleum product prices set the benchmarks. If prices rise in Europe or there are risks of shortages, this affects the export alternative for Russian producers. However, there is no direct dependence at this moment, as the Russian market is largely isolated from the European one. The main factors for the increase are seasonal demand surges within the country, unplanned repairs at oil refineries (NPPs), increased logistics costs, and overall inflationary pressure.
Russia produces about 12,000 tons of aviation kerosene annually, more than enough to meet domestic market demand, according to Nikita Illeritsky, an expert in oil and gas sector services. Typically, 10-15% of total production was intended for export.
Russia fully meets domestic demand for aviation fuel, and there are no risks of shortagesSergey Frolov, managing partner at NEFT Research, notes that Russian airlines are entitled to excise tax deductions, which also serves as a mechanism for stabilizing aviation fuel prices and, consequently, ticket prices. He estimates that the rise in ticket prices will be within the average inflation level.
According to Stankevich, the current situation with aviation kerosene does not appear to be critical. Fuel constitutes roughly 25-35% of the cost of air transportation (depending on the type of route). If the price of kerosene increases, hypothetically, by 10-15%, the direct contribution to ticket price increases could be 3-5%. However, airlines also consider other factors—currency exchange rates, leasing payments, airport fees, and demand.
Illeritsky believes that if aviation kerosene prices continue to rise, airlines will inevitably pass these costs onto customers in their transportation prices.
A source from the aviation sector confirmed to "RG" that this is already happening. Domestic airlines cannot completely ignore the increase in global prices. This is particularly true for international flights. Abroad, planes are refueled not at Russian but at global prices.
Representatives from the tourism industry told "RG" that the increase in fuel prices both domestically and abroad directly affects ticket prices. This increase is not uniform and depends on flight duration. The Association of Tour Operators of Russia (ATOR) reports a sharp rise in prices among foreign airlines, especially for pre-paid blocks of seats. For example, FUN&SUN reported that a tour to Egypt has increased by 57 USD per person, and fuel surcharges on some routes have risen more than 110 USD. In Thailand, the average price increase was 119 USD, with some cities experiencing hikes of up to 129 USD. The most significant jump has occurred in Vietnam, where the average increase is 161 USD per person (approximately 27,500 rubles for two), and on specific routes, it has reached up to 200 USD (34,200 rubles for two). ATOR notes that airlines are issuing additional bills for upcoming flights that have already sold tickets at previous prices, with many passengers already issued tickets and vouchers.
Additionally, the direction of outbound tourism plays a role. Currently, Russians primarily travel to friendly countries, that is, to the south and east. Due to the conflict in the Middle East, airlines are forced to fly around dangerous zones, which increases the consumption of already expensive fuel.
The government has instruments at its disposal to stabilize prices, emphasizes Stankevich. Primarily, this includes the adjustment of the damping mechanism, temporary restrictions on the export of certain petroleum products, agreements with oil companies, and subsidies for airline traffic on socially significant routes.
Sergey Tereshkin, General Director of Open Oil Market, believes that it is most reasonable to stimulate aviation kerosene sales through the stock exchange—a public platform that simplifies monitoring wholesale prices. Export bans or subsidies will not yield the results that can be achieved through competition among suppliers, he contends.
Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and a member of the expert council of the "Gas Stations of Russia" competition, expressed a particular opinion. He insists that nothing is stopping airlines from building reserves or working directly with producers. This would average prices and protect them from external price spikes. The expert believes that airlines should begin hedging their risks themselves. For instance, they could purchase futures contracts—they incur losses in the physical market but gain profit on paper. The industry must avoid perpetual reliance on state support and regulation. Airlines are commercial entities that pay dividends to shareholders and bonuses to employees, not farmers who cannot harvest due to rising fuel prices.
The companies within the Aeroflot group, S7 Airlines, Ural Airlines, and Nordwind Airlines did not respond to requests from "RG."
Source: RG.RU
