Airlines & airports (AO) | Kerosene shortage risk and reimbursements: Who picks up the bill

Research evidence excerpt

Airlines & airports (AO) | Kerosene shortage risk and reimbursements: Who picks up the bill

News comment

Release date: 18 May 2026

Marc Zeck, CFA

Equity Research Analyst

+ 49 69 7569 6323

mzeck@keplercheuvreux.comAirlines & airports

Europe

Kerosene shortage risk and reimbursements: Who picks up the bill

Key points:

While European airlines became more confident lately that a significant kerosene shortage won't occur in Europe during the

summer travel period in the event of a prolonged closure of the Strait of Hormuz, investors were worried that eventual kerosene

shortages would trigger reimbursements to travellers for cancelled flights.

To provide clarity on the issue, the EU Commission recently published guidance on the application of existing EU rules on

refunds, among other things.

According to the guidelines, airlines may be exempt from paying compensation if they can prove that a local fuel shortage caused

the flight cancellation.

Unsurprisingly, we believe this is good news for the airline sector.

What is the reimbursement issue about?

Airlines in Europe face some of the toughest passenger rights regulations in the world, which is good for the consumer, of course,

but can be a significant financial burden to airlines.

In our discussions with investors since the start of the war in Iran, we often faced the question of whether airlines will need to

reimburse travellers if flights are cancelled due to a shortage of kerosene at the airport. According to current regulation, airlines

are in principle required to pay compensation for cancellations less than 14 days before the scheduled departure unless the

passenger was offered re-routing in good time.

Existing regulation allowed for exemption from the requirement of paying compensation if the cancellation is caused by