There is no jet fuel shortage, according to Greg Raiff, CEO of private jet services company Elevate Jet. The Strait of Hormuz may be closed, locking away more than 20% of the world’s supply of jet fuel. Major airlines have cancelled hundreds of flights all over the world. And Europe may reach a 23-day shortage threshold in June. But Raiff hasn’t seen a lack of jet fuel. “Those stories are largely politically driven by governmental authorities who are trying to pressure an end to the war, and no better way to get people out than tell them that they can’t get to their summer holiday,” he told Fortune.
“Not only has demand not slowed for private aviation, since fuel prices went up and the war started, it’s actually gone up slightly,” he says. “Aviation is up this year in terms of total demand, total hours flown, total volume of arrivals and departures, on a global basis.”
According to ESGauge, the analytics firm, 48.8% of S&P 500 companies now allow their CEOs to have private use of the corporate jet, up from just 6% in 2021.
“I’m saying we are not going to run out of jet fuel. In my professional opinion, 35 years doing this, that we are in no risk of running out of jet fuel anytime soon,” Raiff said.
What Raiff has seen is price-gouging at private airports and terminals.
The price of jet fuel on the open market is now over $4 a gallon. But at one Washington, D.C., facility Raiff says he saw private jet owners being charged $10.42 per gallon.
In addition to the price of the fuel, “they’re now charging about $1 in taxes and fees and $5 for the privilege of having the minimum wage kid at the fuel truck pump gas into your airplane, so it’s over $10 a gallon,” he said.
Private fliers are relatively price-insensitive, Raiff says, which is why he worries that airstrips won’t bring down the prices they are charging once the war is over.
So why are commercial airlines canceling thousands of seats across the globe?
Because airlines want to weasel out of running their less lucrative routes, he says. To keep their “slots” at airports, airlines have to contractually commit to running a minimum number of flights on certain routes. Normally that is no problem. But with the price of jet fuel double what it was before the war, suddenly some of those routes aren’t profitable. And a lot of the canceled flights were to places like Dubai or Riyadh, where no one wants to land anymore.
So the airlines have successfully declared “force majeure,” allowing them to cut their unprofitable flights while keeping their slots.
The real crunch will come in the fall, if the U.S. is still at war with Iran, Raiff said. That’s because jet fuel and home heating oil are similar products and refineries can make both. The extra demand on the heating oil market may put pressure on the air travel market, he said.
“If we still have this issue going in the fall, call it October, I think we’ll begin to have a competition between heating our homes or flying our planes.”
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