Double Fuel Prices Crush Widebody Airlines

Jet fuel prices have doubled since January this year, and airlines are struggling to cope with the increased costs. In our previous article, we analyzed the impact on short-to-medium-range flights operated by narrowbody aircraft, finding that mainline airlines will face halved operational margins and low-cost carriers will be in trouble unless they raise ticket prices.

We now turn our attention to long-range networks, which rely heavily on widebody aircraft such as the Airbus A330/A350 and Boeing 787/777. According to the Leeham Aircraft Performance and Cost Model (APCM), fuel costs play a larger role on these flights, with significant implications for airline profitability.

Using the APCM, we developed cost, revenue, and margin data for a typical long-range network, finding that fuel prices have a major impact. The IATA average jet fuel price has more than doubled since January (Figure 1), reaching levels not seen in years.