CALGARY — WestJet Chief Executive Alexis von Hoensbroech said jet fuel prices “spiked in a heartbeat” after conflict erupted involving the United States, Israel, and Iran, placing renewed strain on global energy markets and increasing operating costs for airlines.The sharp rise in fuel prices has pushed the Calgary-based carrier to steadily raise fares, fees, and surcharges as it attempts to recover growing operational expenses. According to the airline, fuel prices climbed too rapidly for losses to be immediately recovered.“We are pretty successful in passing on an increasing share (of the costs),” von Hoensbroech said during an interview with the Financial Post.“I’m pretty confident that in the course of this year, at some point in time, we will be passing on the entire incremental cost.“Just logically, there’s no other way, because you’re either passing your costs on, or you’re out of business,” he added..Canadian airlines are increasingly raising fares and introducing additional surcharges as carriers contend with another sharp increase in jet fuel prices — the second major surge in just four years.The latest energy crisis began after Iran effectively shut down the Strait of Hormuz, a key global shipping corridor for oil, sending commodity markets higher and increasing costs for both gasoline and air travel.Von Hoensbroech said the airline has avoided cancelling routes so far, instead choosing to reduce flight frequencies and make operational adjustments to help absorb rising expenses. Several competing airlines, however, have moved forward with deeper service cuts.Data from aviation analytics company Cirium shows WestJet reduced seat capacity by approximately four percent for the June-to-September travel season. By comparison, United Airlines Holdings Inc. implemented cuts roughly twice as large, while Air Canada’s reductions were slightly smaller than those made by WestJet..“I fully expect to see reduced tourism,” “Fewer international flights coming into Canada with tourists and fewer Canadians traveling internationally, and also domestic flights.” Susan Bell, the Senior Vice-President at Rystad Energy said to the Financial Post.She also added if airlines respond to falling demand by cutting their flight schedules further, they may raise ticket prices even higher to recover the lost revenue.Rising oil prices are continuing to generate strong profits across the energy sector. However, many companies have so far prioritized returning excess cash to shareholders rather than investing in new projects that could boost employment and increase wages.Despite ongoing pressure, the airline industry still appears to be expecting solid demand in Western Canada.“That’s a nice thing of running (an airline) in Alberta; you have a little bit of a natural hedge,” von Hoensbroech said. “If the fuel price goes up, then we have higher costs, but we also have stronger demand, because our customer base has more disposable income."
