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Brussels Playbook Podcast
Week Ender: Did Europe dodge a summer travel crisis?
00:22:44
Europeans are travelling in huge numbers this summer — but the conflict in the Middle East, volatile fuel prices linked to disruption in the Strait of Hormuz, and a troubled new border system are making journeys more complicated.
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Europeans are worried about wars, inflation and extreme heat. But you will have to pry our vacations from our cold, dead hands. According to the latest survey from the European Travel Commission, 81% plan to take time off and travel between now and November. That's more than last year. And Southern Europe remains the favorite destination. Greece could be heading for one of its best and most lucrative summers ever. But move a little closer to the Mideast conflict and the picture changes. Cyprus has seen arrivals fall by almost 18%. Europe's busiest travel season is colliding with a war that sent prices soaring, including jet fuel prices, as well as raised fears of flight cancellations that made some travelers think twice about where they go. Add to that a new biometric border system producing long queues. So did Europe really avoid the summer travel crisis that many people feared? What should passengers expect when fuel prices rise, flights go wrong, and the passport line barely moves? I'm Sarah Wheaton, host of the Brussels Playbook Weekender. To help me break it all down, I've invited three of my expert politico energy reporter Ben Munster, mob reporter Tomas Aleka, and senior reporter Jordan Dahl. All right, quick summer travel check. Have you all booked your holidays yet? And was it way more expensive than last year? What are you most worried about? Tommaso, we'll start with you.
- [02:18]
B
Yeah, well, I recently booked flights to visit my family and friends back home in Sardinia, and I honestly didn't notice any significant price increase. I also booked a few trips to destinations I've never visited it before, so it's hard for me to compare prices. More broadly, I would say air fare depends on many factors, so airlines use dynamic pricing, meaning they basically adjust ticket prices continuously based on demand and how full the flight already is.
- [02:47]
A
All right, well, you can tell Tommaso is our. Is our airlines reporter already well versed in how it actually works. Jordan, are you, are you looking forward to you're just coming back from. When did it feel more costly?
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D
London didn't feel more costly, but it certainly took a lot longer to get through the security line.
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A
Okay, we'll dive into that.
- [03:04]
D
We'll dive into that. But I am going to New York next week and my Flight was not astronomically more expensive, but I'd say a solid like 20%.
- [03:15]
A
Okay, yeah, that's about what we're hearing in places. Ben, how about you?
- [03:19]
C
Yeah, I'm going to Greece and maybe it was about 20% more expensive. I booked only the the way there, not the return. So I'm taking a big risk, hoping that Hormuz is reopened by the time I head back. So see how that goes.
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A
Well, for one, you're very optimistic.
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C
Yeah, it's a gamble, but I mean
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A
why would that, why would that make a difference?
- [03:38]
C
Well, it wouldn't really, to be honest.
- [03:39]
A
Okay, you just, you just want an excuse?
- [03:41]
C
Well, no, but there's a psychological effect of it. Reopening prices might go down, but you know, it might take long longer for that to pass into, you know, pass through into jet fuel prices and airline prices on top of that.
- [03:51]
A
Well, I can tell you that I procrastinated by four weeks. I'm buying my plane ticket and I could see that as a result of that very normal non geopolitical factor, my price is also about 20% more than if I had just bought it a month earlier. So anyway, but yeah, let's get into exactly what Ben brought up. This Strait of Hormuz. So when the war with Iran began, the outlook was pretty bleak. Shipping through the strait got disrupted, energy prices soared, businesses and households feared much higher costs. And aviation felt hit especially quickly. There were all these warnings about jet fuel shortages, expensive tickets, canceled flights, but pretty much the planes all stayed in the air. So Ben, was this all just a bunch of doom mongering or did Europe actually come close to a crisis?
- [04:43]
C
So it was in mid April, I think, that the IEA basically came out with this very dramatic prediction that Europe had only six weeks left of jet fuel left. And you know, it was at that point where everyone was wondering, you know, will I be able to buy flights? And people sort of panic buying flights and commercial airliners were warning that they might have to cancel flights.
- [04:59]
A
And there were some flights that were
- [05:01]
C
cancelled, there were some flights that were cancelled. And I think some airlines were also reporting shortages, especially in Italy. But in the end what happened was maybe because the IAA made this prediction, or maybe just because the market just did what it did, the market adapted and European refiners, because prices were high, they started profiting from refining more jet fuel. So they started massively increasing the amount of jet fuel they were producing. And then we increased imports of jet fuel from the US and also I think there was a Nigerian refinery called Dangote, which came back online. I think it had been, I think it had been damaged for a bit. And that started also providing a fair amount of jet fuel. And then there were other sources as well. But generally we were able to fill the gaps sufficiently. But I mean, you know, the main effect was prices rather than supply. There was never really a genuine supply shortage, but there could have been.
- [05:49]
A
Interesting, interesting. Tommaso, take us inside the corporate offices of the airlines. What was kind of their, their train of thought during this whole period?
- [05:58]
B
Well, of course they had to pass the cost, the extra cost of fuel onto ticket prices, particularly between March and May, as was saying, Ben, that's, that's when disruptions around straight off form was pushed jet fuel prices sharply higher. But at the same time we've seen most recently that basically jet fuel market seems to have adapted to a new reality. And we have seen at the beginning of this jet fuel crunch, airlines cutting unprofitable routes. So flights that were profitable before, but because of the new price of jet fuel were becoming unprofitable. And then we've seen as pressure on supply eased, airlines shifted back from cutting these routes to, to pursuing their growth plans. It's also worth remembering that apart from the COVID period, air traffic has been growing steadily in recent years. So it's also true that Eurocontrol now expects traffic this summer to increase by around 2 to 2.5% compared with last year.
- [07:02]
A
And Eurocontrol is the like network of air traffic controllers around the eu.
- [07:06]
D
Right.
- [07:07]
B
It's the European Organization which manages air traffic control.
- [07:10]
A
Mm. So ultimately, you know, when we've been talking about these, you know, increased ticket prices, initially, yeah, we were worried that ticket prices could double. Instead it turned out to be more around 20%. As we've been discussing, like is this just kind of normal price inflation or what was behind the change in ticket prices?
- [07:28]
B
I would say that we've seen this price increase particularly dramatic in the first part of the, of the conflict in the Middle East. And it's true that airlines were passing on the cost, but it's also true that most airlines are well edged. It means that they can access jet fuel to the pre war price for most of this year. So we can say that maybe most passengers have not noticed like a huge difference. But if the conflict goes on and accessibility to jet fuel remains scarce, then we will probably see something more later this year or into 2027, kind of.
- [08:08]
A
On that note, Ben, as Tommaso was just saying, we don't have a Great situation necessarily going forward. You talked about how. Yeah, now we're getting all this jet fuel from the US And Nigeria.
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C
Controversial.
- [08:19]
A
Exactly, exactly. So what is the situation going into the next season and year?
- [08:25]
C
Well, I mean, I've spoken to analysts and also people in the commission and they're all saying that really it's, you know, they're talking about the same risks that they were talking about before the Strait of Hormuz was nominally reopened for about half an hour. And we're really just worried about the same supply dynamics because it was reopened for such a short period that nothing really substantially changed in terms of the global supply outlook. One big worry is beyond jet fuel isn't really a big worry, actually, because I think our refining capacity is great enough that we can produce enough to support our needs, which is really just going on holiday. The bigger worry is LNG is gas, natural gas, because basically Europe has these storage, big storage caverns that it has to fill to about 90% by winter. This was imposed after the Russian invasion of Ukraine. Right. Basically to avoid another energy crisis. But we're very low and we're behind target quite substantially. And that means that there's going to possibly be a bit of panic buying as winter approaches and then combine that with rising AC demand, not only in Europe, but in Asia, and you could get a real supply squeeze when it
- [09:31]
A
comes to rising air conditioning demand.
- [09:33]
C
Yes, sorry, air conditioning. I mean, not less demand for AC here because we're still terrified of it, but Asian AC demand, especially driven by El Nino, you know, this, this big sort of super El Nino weather event that's expected to make things much, much hotter. That's likely to also increase pressure on gas supplies. And gas is crucial for heating in the winter, cooling in the summer, as well as a lot of sort of light industries. So a crunch there would not be great. And we might start seeing that over the summer, but also in winter if it turns out our gas stockpiles over in Europe are still very low.
- [10:06]
A
Right. And I guess, does anybody really think that it's actually going to reopen in a definitive way anytime soon? And is anybody kind of setting up alternative routes for fuel?
- [10:17]
C
Look, oil prices rose quite sharply in the last few days, especially after the war basically reignited between Iran and the US but on the one hand, that reflects genuine concerns that the Strait of Hormuz will never really be reopened now that we're in a sort of permanent, semi frozen, intermittent conflict. Right. And that represents a potential structural change to energy markets. There might now be an artificial sort of floor under prices because of this structural. These structural issues with Hormuz. Right. This uncertainty around this incredibly important strait. At the same time, I think there is a general sense that we will find ways around the straight eventually. And that's why in the longer term, if you look at sort of, you know, long term pricing, it reflects maybe a little bit more confidence that things will start to come up again. So, I mean, there's lots of new supply, especially with gas expected in the next few years from other sources. And also, as you sort of hinted at, there's Saudi Arabia, but also Iraq and Syria. They're all working on ways to bypass the Strait of Hormuz. Saudi Arabia is looking into alternative pipelines. I think there are overland routes as well. And Iraq is looking into ways, you know, looking into how it can transport its own cargoes through Syria. So in the long term, it might be all right, we might even see oversupply. But in the short term, I mean, the Strait of Hormuz, you know, it's a write off, you know.
- [11:39]
A
Yeah, yeah. I mean, it's just. It's so interesting to hear you talk about all these contingencies and contrast that to all this discussion about, like, strategic autonomy. Just seems like when the, when the oil hits the. Hits the pipeline at all, when it
- [11:55]
C
doesn't hit the pipeline, when it doesn't
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A
hit the pipeline, it all breaks apart.
- [11:58]
D
I think Ben is correct that there will be alternative routes, but it will take time. And it's being further complicated by other conflicts in the area. The Houthis entered the chat, they attacked Saudi Arabia a few days ago, and that has really escalated the entire region and changes the state of play. But in terms of the actual straight of her moods, I don't see that reopening anytime soon. Anytime we get a ceasefire or any kind of a deal between the US And Iran, it crumbles within days. You saw Trump wanting to take advantage of the strait and impose a 20% surcharge. He quickly dropped that after pushback from the other countries. So this is really just a very volatile situation that I don't see resolved anytime soon.
- [12:40]
A
Yeah. And what about people who are like, I'm just going to do a road trip? You know, should they expect big changes at the pump? I guess they've already been seeing them.
- [12:49]
D
Absolutely. Unfortunately, going on a road trip is not the most economically viable alternative to taking these flights because gas prices are increasing. It depends on where you are in the eu. Some countries, like Spain, are much cheaper. But then you go to the Netherlands, Germany and others. And they're considerably more expensive. So a road trip sounds nice, but until you get to the pump.
- [13:12]
A
Okay, well, I'm sure we're going to hear from train aficionados that we did not delve into that topic, but it will be something for another episode. Okay, so we've talked about the costs and we've talked about the big geopolitical issues, but of course, when we're traveling, we care about our own individual experience. And the EU is intervening there as well. So, Tommaso, after more than a decade of negotiations, the EU has finally agreed on an overhaul of air passenger rights. What changed? Do I have more rights or less rights now?
- [13:43]
B
For now, nothing.
- [13:47]
A
That's the most EU answer, actually.
- [13:50]
B
Exactly. The current rules will remain in force until around mid-2027, so travelers don't need to worry. This summer, the pre reform rules will remain in place. Once the new rules will take effect in mid-2027, passengers will notice a few changes. For example, if a flight is delayed by at least three hours or cancelled, airlines will have to send passengers clear instructions on how to claim compensation. It's not the case nowadays, and that's why most passengers which are entitled to compensation don't apply to receive it. The reform also bans airlines from charging extra to seat parents next to children under 14 or passengers with disabilities next to their accompanying person.
- [14:36]
A
Okay, so that sounds generally pretty good. They're going to give more instructions about how to claim compensation if something goes wrong. Are there any changes to the actual euro figures that we're entitled to?
- [14:48]
B
I have to disappoint you again. Because the current compensation rules will remain unchanged. Passengers are entitled to compensation between €250 and €600 if their flight is canceled or delayed by at least three hours, unless the disruption is caused by extraordinary circumstances. For example, if the delay is caused by extreme weather, airlines generally do not have to pay compensation.
- [15:12]
A
All right, so let's just make it super practical. If our producer Diana says Brussels to Athens flight is delayed for hours and then cancelled, what does the airline owe
- [15:22]
B
him in this case, if eventually gets cancelled, he will be entitled first of all to the reimbursement of the ticket and to the compensation. For short haul flights, it would be around €250. If it's medium haul, we'll have something around €400. And then if it's long haul flights, intercontinental flights, then it would be €600.
- [15:43]
A
Okay, so let's say the flight takes off on time these days, especially if you're traveling outside of the Schengen area or coming into the Schengen area and you are not an EU citizen could be pretty messy. So the EU's new entry exit system replaces passport stamps with facial scans and fingerprints. And Jordan, I know you've traveled to London as you mentioned and experienced this new system yourself. What happened?
- [16:11]
D
Just very long lines. I've traveled on the Eurostar probably 20 times between Brussels and London in the last two years. And the line, yeah, it goes pretty fast. This time it was out the door and that was just to scan your Eurostar ticket to then get into security and then get into passport control. And what has changed is normally you could go a little bit earlier if you wanted extra time. Now that's definitely not the case. They are very strict about only letting people in who have a particular time of train and then if you have a later train, you have to wait. And apparently the same system is in place at the airports now too.
- [16:48]
A
Tell me more about this new system and why it's creating long queues.
- [16:51]
D
It's essentially collecting data and meant to be a security precaution in the Schengen area. So if you as a non national come into somewhere in Schengen, your first landing stop, you have to get fingerprinted, you get a facial scan so all of your biometrics are collected. But this is a time consuming process. Some airports have it automated, others have their security actually manually entering in all of this information. So the rollout has been very hit or miss across the eu, but the overarching trend is really, really long delays.
- [17:31]
A
Some places we're hearing as long as five hours. And so, you know, Fondr Lyon has even had to engage on this. Countries can now ask Frontex for support. They can deploy more border officials and relax some of the biometric checks when there's a really long line, all in hopes of avoiding chaos at the height of the summer vacation season. And of course, you know, Europe really relies on a lot of travel, especially in the summertime from outside of the Schengen area, from the us, from China, from all over the world. So we're hearing about these super long lines in major tourist hubs like Greece, like Italy, other popular places. So it's something definitely that we will be watching. My family that wants to visit me will certainly be watching. So but let's, let's get down to some practical advice, one sentence each. Tommaso, people are going to really want to hear from you the most. As our airlines reporter, what should travelers do differently this summer?
- [18:27]
B
Well, I wouldn't say travelers need to do anything radically different, they should follow the same advice as always, check the rules that apply to their journey and allow enough time at the airport if your trip involves border controls, especially also under this new entry exit system, I'd avoid booking very short connections because longer border queues could make you miss your onward flight.
- [18:52]
A
Jordan, what's your what's your hot summer vacation tip?
- [18:55]
D
Do not get to the airport super early. That might really. I know it is a hot take. That might be your first impulse when you hear about these really long lines to get there early. But the same thing that I experience with the Eurostar is happening at airports where they are limiting the number of people who can go through and they're basing it on when your flight is. So getting there five hours before in the hopes of avoiding all the mayhem will not actually help you. You'll just sit in the airport for longer.
- [19:22]
A
Okay, I hope my fiance is listening to this because this is a big debate in our household. He is on team early.
- [19:29]
D
Oh, I'm team one hour before.
- [19:31]
A
Exactly. We're on a team together. All right, Ben, your tip?
- [19:36]
C
I don't know, just stay in Brussels. Enjoy. Enjoy the, you know, the beautiful environs of Anderlecht and Wallow or whatever it's called.
- [19:43]
A
But remember, Americans don't understand irony.
- [19:46]
C
Oh, sorry, don't say in Brussels. Definitely don't go to Brussels. No, I would say I did hear that short haul flights might be a better idea to travel sort of locally, especially in Europe if you're in Europe. Because long haul flights I think are more linked to global price spikes, whereas short haul flights sort of, if there's a lot of there's healthy regional stockpiles, you might have a better chance of securing a cheap flight.
- [20:07]
A
Indeed. Yes, my flight search does bear that out. I'm just going to to Poland and the prices were not bad. Again, my own procrastination notwithstanding. So anyway, bottom line, after all the warnings, are we facing an abnormal summer of travel or just a normal summer, but with an especially alarming geopolitical situation? Tommaso, I'll let you, I'll let you give us the definitive answer on that one.
- [20:31]
B
I would say that apart from avoiding travel to war zones, I'd say that this isn't an unusually difficult summer for travelers. Thanks to technology, traveling is becoming more and more easy as times goes by. And I would say that it's not going to be that different this summer from the previous we had.
- [20:51]
A
Yeah. Although sometimes you don't know if you're traveling to a war zone, as some people who were going to Cyprus in the springtime found out a bit. But, yeah, fair point. All right, Tommaso, Jordan, Ben, thank you so much for joining me.
- [21:03]
B
Thank you.
- [21:04]
C
Thank you.
- [21:05]
D
Thanks.
- [21:08]
A
Those are my colleagues, Ben Munster, Jordan Dahl and Tommaso Lecca. Thanks again to all three of them. And that's almost it for this week. Staying with the summer mood. As we said last week, we're preparing a special summer books episode and we'd love your recommendations. Tell us what you're planning to read or what you've already read and think others should pick up. Fiction, nonfiction, politics, crime, poetry, anything good that might offer a little respite during the hot summer months. You can reach us on our WhatsApp. The number and link are in the show notes or email us@podcastolitico eu. And if you haven't already, please subscribe to the Brussels Playbook podcast. That's the feed where you'll find the Weekender and leave us a rating or review. Thanks as always to our audio producer, Sagar Ringmar and supervising audio producer Diana Sturris. I'm Sarah Wheaton. I'm off on my vacation now, so Ann McAvoy will be with you next week. See you soon.