According to various estimates, fuel accounts for 25-35% of the price of airline tickets. It is impossible for the rise in fuel prices not to affect ticket costs; the question remains how much this increase will be reflected in ticket prices.
The cause of the situation is the surge in oil prices due to the conflict in the Middle East. Worldwide, jet fuel prices have risen significantly more than in Russia—by 60-120%. The highest increases are observed in Europe and Asia. The International Energy Agency (IEA) has even suggested that a fuel shortage may arise in Europe, with Bloomberg warning of an increase in flight cancellations.
According to the Ministry of Energy, Russia fully meets its domestic demand for jet fuel, and there are no risks of shortages in the internal market. Production capacities and reserves allow for stable coverage of airline needs. Regarding price volatility, the ministry stated that it is market-driven and linked to the external situation. Currently, there is no need for emergency regulatory measures, they are confident.
The fact is that Russia employs a damping mechanism for jet fuel. This is akin to the damping mechanism for automotive fuel, but with one significant difference: it is paid not to fuel producers but to carriers—airlines. The government reimburses 65% of the difference between the export price of jet fuel and the fixed price set by the government for the domestic market. The Ministry of Energy clarified that currently, this damping mechanism helps keep the final prices for jet fuel at a relatively low level.
However, this compensation is not complete. As a result, while the cost of jet fuel is increasing slowly and remains significantly lower than in the rest of the world, it is still on the rise. Other factors also contribute to this increase. As noted in an interview with "RG" by Yuri Stankevich, Deputy Chair of the State Duma’s Energy Committee, the indirect influence of global market conditions is present: jet fuel is a traded product, and global oil and petroleum product prices set a benchmark. If there is a price rise or shortage risk in Europe, it reflects on the export alternative for Russian producers. Nonetheless, there is currently no direct dependence—the Russian market is largely isolated from Europe. The primary factors for the price increase are seasonal demand increases domestically, unscheduled maintenance at oil refineries, rising logistics costs, and overall inflationary pressure.
Jet fuel production in Russia is around 12,000 tons per year, which is more than sufficient to meet domestic market needs, according to Nikita Illeritsky, an expert in developing practices for providing services to the oil and gas sector. Typically, 10-15% of total production is directed towards export.
Russia fully meets its domestic demand for jet fuel, and there are no risks of shortages.Managing Partner of NEFT Research Sergey Frolov notes that Russian airlines have the right to deduct excise taxes, which also serves as a mechanism to restrain prices for jet fuel and, consequently, airline tickets. He estimates that the rise in ticket prices will remain within the average inflation rate.
According to Stankevich, the current situation regarding jet fuel does not appear critical. Fuel constitutes approximately 25-35% of the cost of air transport (depending on the type of route). If jet fuel prices rise, say, by 10-15%, the direct contribution to ticket price increases may be around 3-5%. However, airlines also consider other factors—exchange rates, leasing payments, airport fees, and demand.
Illeritsky believes that if jet fuel prices continue to rise, airlines will inevitably pass these costs on to ticket prices.
A source from the aviation industry confirmed to "RG" the expert's words, stating that this is already happening. Domestic airlines cannot completely disregard the rise in global prices, especially for international flights, where aircraft are refueled not at Russian prices but at global market rates.
Representatives from the tourism business told "RG" that the increase in fuel prices, both domestically and internationally, directly affects ticket prices. The increase is uneven and depends on the duration of the flight. The Association of Tour Operators of Russia (ATOR) reports a sharp rise in prices by foreign airlines, particularly concerning pre-purchased blocks of seats. For example, FUN&SUN reported that a tour to Egypt increased by $57 per person, with fuel surcharges on some routes exceeding $110. In Thailand, the average price hike was $119, while for some departure cities, it reached up to $129. The most significant jump was noted in Vietnam, where the average increase was $161 per person (about 27,500 rubles for two), with certain routes rising to $200 (34,200 rubles for two). ATOR points out that airlines are issuing additional invoices for flights in the near future for which packages were already sold at previous prices, with many tourists having already issued tickets and vouchers.
On top of that, the direction of outbound tourism also plays a role. Currently, Russian travelers are mainly going to friendly countries—that is, to the south and east. Due to the conflict in the Middle East, airlines are forced to bypass dangerous areas, which increases the fuel consumption of the already expensive fuel.
The government has tools to restrain prices, emphasizes Stankevich. Primarily, these include adjustments to the damping mechanism, temporary restrictions on the export of certain petroleum products, agreements with oil companies, and subsidizing airline transportation on socially significant routes.
Sergey Tereshkin, General Director of Open Oil Market, believes that the most effective approach would be to stimulate jet fuel sales through the exchange— a public platform that simplifies monitoring wholesale prices. He argues that export bans or subsidies will not achieve the results that can be accomplished through supplier competition.
An alternative opinion was expressed by Dmitry Gusev, Deputy Chair of the Supervisory Board of the "Reliable Partner" Association and member of the expert council for the "Gas Stations of Russia" competition. He asserts that nothing prevents airlines from building reserves or working directly with producers. This would average prices and protect them from external price fluctuations. The expert is confident that airlines should start hedging their risks on their own, for instance, by purchasing futures—if they incur a loss in the physical market, they can gain in the paper market. Gusev believes that the industry should move away from perpetual reliance on government assistance and regulation. Airlines are commercial structures that pay dividends to shareholders and bonuses to employees, rather than farmers who cannot harvest due to rising fuel prices.
Companies within the "Aeroflot" group, S7 Airlines, Ural Airlines, and Nordwind Airlines did not respond to "RG" inquiries.
Source: RG.RU
