Air France sees jet fuel costs surging to 45% of spending, almost doubling share

Jet fuel costs could almost double their share of Air France's operating expenses to as much as 45% due to rising international prices, CEO Anne Rigail said at an industry conference on May 12.

Typically, jet fuel accounts for about 25% of operating costs, Rigail said at the International Air Transport Association's Aviation Energy Forum in Paris. To cushion against price increases, Air France had hedged 70% of its fuel exposure for the first half of 2026 and 66% over the full year, but only 33% in 2027, she said.

"What makes the current situation especially difficult is that jet fuel prices have increased much faster than crude oil because of tension in the refined product markets," Rigail said, observing sustained pressure on the fuel type amid lasting pressure on Middle Eastern flows.

S&P Global Energy CERA analysts said April 30 that jet fuel supplies have been among the hardest hit by the conflict in Iran, with seaborne exports falling 40% due to the conflict.

Jet volumes currently in transit are roughly 15 million barrels, down from 45 million barrels in the previous summer and 35 million barrels before the outbreak of the war in Iran, according to S&P Global Commodities at Sea data.

Platts, part of S&P Global Energy, assessed jet fuel cargoes on a CIF basis in Northwest Europe at a $59.85/barrel to the Dated Brent benchmark on May 11, up from $34.41/b before the war.

Jet fuel inventories are expected to see a major fall in the coming months, CERA analysts have said, and stocks in the Amsterdam-Rotterdam-Antwerp refining hub were already showing signs of strain. Regional inventories of aviation fuel fell 5% on the week to 558,000 metric ton on May 7, against a five-year average of 866,000 mt, according to data from Insights Global.

Some carriers have already responded by cutting flight schedules or imposing surcharges for long-haul flights. Airlines that are part of integrated groups have a stronger operational flexibility to adapt to volatility, Rigail said, underscoring the importance of maintaining a strong presence in European hubs, Rigail said.

Air France is part of the Air France-KLM group.

Regulatory pressure

The elevated fuel cost burden coincides with rising prices linked to EU climate regulations. From 2025, the EU's SAF mandate obliged suppliers to make up 2% of product delivered to airports with sustainable aviation fuel, an alternative that currently costs two to three times more than the conventional fossil alternative.

A submandate stipulates that 1.2% of jet fuel supplied at European airports must be synthetic fuel, or e-fuel, by 2030, a new fuel type that relies on nascent power-to-liquid technology. In the case of non-compliance, penalties could range between Eur7million-Eur9 million ($8 million-$10 million), Rigail said.

She said the submandate and the associated penalties "do not seem reasonable" and called for pragmatic measures supporting industrial ramp-ups.

Cost pressure risk is becoming more acute for European carriers in an unaligned international market, Rigail said. Meanwhile, Europe has adopted a regulatory approach based on SAF mandates and carbon pricing through its emissions trading system, other regions have moved more slowly, risking attracting market share to rival hubs, she said.

Air France is urging Brussels to align the EU's Emissions Trading Systems with the International Civil Aviation Organization's Carbon Offsetting and Reduction Scheme for International Aviation to prevent offshoring traffic and emissions. The carrier wants a "meaningful share" of ETS revenues reinvested in aviation decarbonization, particularly SAF production across all pathways, including hydroprocessed esters and fatty acids, alcohol-to-jet and e-SAF technologies, Rigail said.