The tourism employers' association in the Canary Islands has expressed concern about the impact the Middle East crisis will have on air ticket prices. Although the effect will not be immediate, it is expected to be substantial once the price hedging contracts currently held by airlines expire.
“"We will find that Canarian connectivity will have become much more expensive."
The root of this situation lies in the conflict in the Middle East, which has led to the disruption of the Strait of Hormuz, a crucial route for 20% of global hydrocarbons. This blockade is driving an inevitable rise in oil prices, considered a fundamental engine of the world economy.
Although the increase in ticket prices to the Canary Islands is not yet noticeable to consumers, alarming signals are already being observed in the European airline sector. For example, a major German airline has announced the cancellation of 20,000 flights, equivalent to about 120 daily connections.
This situation is attributed to the possibility that some airlines, especially low-cost carriers, may not have such extensive price coverage. Unable to pass on the real cost of kerosene to their fares, they opt to reduce operations to minimize losses. To date, no direct flight cancellations to the Canary Islands have been reported.
However, the impact could be indirect. The cancellation of internal flights in tourist-sending countries, such as Germany, could hinder the arrival of visitors who use major airports like Frankfurt as connection hubs to fly to the Islands. Beyond the cost of kerosene, which accounts for about 30% of an aircraft's operation, the main concern of the Canarian tourism sector is the erosion of European consumers' purchasing power.
“"It could lead to a recession in tourist demand."
The energy crisis also affects the pockets of potential visitors, who see how the cost of heating their homes or filling their vehicle tanks increases. This reduces disposable income for leisure activities like travel, which is considered a luxury. European tourists will prioritize their basic needs, which could lead to a decrease in travel if they do not have sufficient income. This situation could trigger a recession in tourist demand, severely impacting the Canarian economy, which largely depends on air connectivity and visitor flow. Therefore, the hotel sector finds it very difficult to pass on the generalized cost increase to final prices.
The representative of the tourism employers' association has expressed a pessimistic outlook on a short-term resolution to the conflict. Even if the war were to end immediately, the repair of oil extraction and refining infrastructures in the region would take years. Given this scenario, the sector can only hope for the end of the conflict and "grit its teeth and endure" while the geopolitical situation normalizes.
