‘Sufficient’ jet fuel in Sasol’s drums to keep airlines running

South African energy and chemicals giant Sasol has taken steps to ensure that it has sufficient supply of jet fuel to keep the country’s airlines in the skies.

This as the aviation industry grapples with complications brought on by the war in the Middle East.

Read: Philippines says grounding planes is a ‘distinct possibility’

Pressure on the world’s most critical maritime oil choke point at the Strait of Hormuz has seen oil prices shoot up as high as $112 per barrel in the three weeks since the start of the conflict on 28 February.

Carriers across the world have battled to absorb the full cost of the higher fuel prices, passing some of the cost on to consumers.

Locally, FlySafair, Airlink and South African Airways (SAA) have added temporary surcharges to ticket fares to manage their books until stability returns to the markets.

Read:
FlySafair hikes fares amid oil price shock
SAA ticket prices also up as volatile oil prices squeeze aviation industry

Carriers abroad have been warned to brace for jet fuel shortages as soon as next month, risking flight cancellations to long-haul destinations at the end of the busy Easter holiday period.

Sasol says it has sufficient fuel inventory to meet supply obligations across all grades of fuel. It is unclear how long current reserves can sustain demand from airlines, but the company says the short-term outlook is stable.

“We have implemented measures to source crude from alternative ports not located in the Persian Gulf, and are considering reasonable alternatives, should it become necessary,” says Sasol spokesperson Alex Anderson.

“We are actively assessing developments in the Middle East and have appropriate contingency measures in place to manage risks to operations and supply chains,” he adds.

Government ‘in talks’

Sources at the Department of Mineral and Petroleum Resources previously told Moneyweb that government is in continuous talks with oil companies to avert a day-zero situation.

Aviation expert and MD of Plane Talking Linden Birns says the fluidity of the situation makes it difficult to project how long it could be before domestic airlines have to rethink their flight plans, if at all.

“Unlike petrol, for example, jet fuel has gone unregulated in South Africa so it’s a free market,” he says.

“It’s tricky because at what point do you ask government to intervene and when do they say ‘Look, above a certain cap, government steps in place and we will subsidise above this’?”

Opportunity in crisis

Birns says players in e-commerce and couriers are equally concerned about the impact of the war on their business operations – but that no good crisis should ever go to waste, suggesting that the tourism industry could leverage on diversions from Dubai, Doha and Tel Aviv to other holiday destinations.

“It presents other opportunities for us and other parts of the world. Nobody wants to be frightening people away from travelling when there’s still very healthy demand for travel,” he says.

“We’re seeing other airlines with [flights] to South Africa running at almost full capacity.”

While some UAE airlines, including Emirates, are operating reduced and limited flight schedules, others are more cautious around flights into and out of the Gulf region and its surrounds. Some of the changes affect routes to South Africa.

The Middle East is one of the most critical transit corridors for South African travellers heading to Europe, Asia, and beyond.

A source at Dube TradePort in KZN tells Moneyweb that Emirates is on a reduced schedule of three flights to King Shaka International Airport per week (it previously operated daily flights on this route).

“Qatar [isn’t] operating at this time but that could change at any point,” the source adds.

Flightradar24’s flight history for Emirates flight EK767 shows seven landings at OR Tambo International Airport from Dubai International since 17 March, with at least 10 more flights expected to land in Johannesburg between Wednesday (25 March) and 2 April.

The flight history for Emirates EK770 shows just as many scheduled for Cape Town International Airport.

There doesn’t appear to be a scheduled flight from Dubai to South Africa on Qatar Airways until 16 April.

Holidaymakers not ditching plans

The Association of Southern African Travel Agents (Asata) says when capacity through the Dubai hub drops sharply, it is immediately felt in seat availability and pricing.

Asata CEO Otto de Vries says airlines have moved quickly and the situation is improving, but “the gap in capacity cannot be instantly replaced by other carriers, and reduced supply with sustained demand puts upward pressure on fares”.

From a consumer perspective, Asata has reported fewer cancellations by travellers than expected during this volatile period.

Because the situation remains highly fluid, locking in an industry-wide cancellation rate is difficult, says De Vries.

“However, what our airline partners are telling us is far more encouraging than expected.

“South Africans are overwhelmingly choosing to postpone rather than cancel outright, and forward bookings for the rest of the year remain remarkably strong.”

De Vries adds that instead of consumers cancelling in panic and losing their money, travel advisors are working closely with clients to navigate complex airline disruption policies, secure waivers, and safely postpone trips.

He says regional carriers have been very transparent with travel agents to help manage expectations.

Carmen Hidalgo of Corporate Traveller says there has “definitely” been more of a shift and “not a decline” in travel activity.

“While the Middle East situation has resulted in some re-routings and operational adjustments, we are not seeing a notable drop in travel demand from our client portfolios,” she adds.

“Clients are largely continuing with their journeys, choosing alternative routes and airlines as needed rather than cancelling or postponing travel.”

Read: South Africa consumer mood extended upward trend before Iran war