Spanish Airlines Expand Capacity for Peak Travel Season Despite Fuel Concerns

Spanish Airlines Expand Summer Travel Capacity Despite Fuel Concerns

Spanish Airlines Increase Capacity Amid Uncertainty

MADRID, April 21 (Reuters) - Spanish airlines have increased seat capacity for the April-October peak travel season by 6%, banking on strong tourist interest in the Mediterranean country despite wider concerns over the potential impact on travel plans from a fuel supply crunch linked to the Iran war.

The rise in capacity to almost 260 million seats is in line with last year's 5.9% passenger growth, although industry players caution that inflation, geopolitical tension and economic uncertainty could weigh on demand.

Industry Confidence and Demand Outlook

"The outlook is good," Javier Gandara, president of Spanish airlines association ALA, told a news conference on Tuesday. "The 6% increase shows confidence that many people will want to visit Spain this summer, and part of that demand is traffic diverted from conflict zones and neighbouring areas."

Regional Route Expansions

Route expansions will be concentrated in coastal regions such as Alicante and Andalusia, with capacity increasing by 14% and 8%, respectively, while Madrid and Barcelona airports will see an 8% rise in available seats.

Uncertainty in Summer Demand

However, actual demand during the summer peak remains unclear. "We are facing a much more uncertain situation this year, with developments changing by the minute," Gandara added.

Fuel Supply and Pricing Policies

Insulation from Fuel Supply Disruptions

Spain's airlines are relatively insulated from potential fuel supply disruptions, as over 80% of their jet fuel comes from domestic refineries, with only 11% of their crude oil sourced from the Middle East, according to ALA.

International Airlines and Fare Stability

International airlines serving Spain are also not expected to significantly alter fares, as approximately 70% of summer fuel needs are secured through pre-conflict hedging agreements.

Volotea's Temporary Pricing Policy

However, Spanish low-cost carrier Volotea has introduced a temporary pricing policy linking ticket prices to fuel costs. Consumer advocacy group Facua on Monday called for an investigation into the policy, alleging potential breaches of consumer protection laws.

Industry Response to Pricing Measures

Gandara said he was unaware of any other Spanish airlines implementing similar measures, adding: "We always expect that each company should be free to set its business strategy within the regulatory and legal framework".

(Reporting by Corina Pons, editing by Andrei Khalip, Kirsten Donovan)