Branson blames war for Virgin Atlantic fuel surcharge as fares climb

Sir Richard Branson has laid the blame for higher air fares squarely at the feet of what he called “foolish leaders” who start wars, as UK business travellers continue to pay a Virgin Atlantic fuel surcharge introduced in response to soaring oil costs.

The Virgin Group founder was speaking as the airline confirmed it will fly Team GB and ParalympicsGB to the Los Angeles Olympics in 2028, but his remarks on the Middle East will matter more to companies watching their travel budgets. The conflict involving the United States, Israel and Iran has disrupted the production and shipping of millions of barrels of oil, pushing up the cost of jet fuel and, with it, ticket prices.

Sir Richard did not hold back. “The Iran conflict was completely unnecessary. There was a nuclear agreement between Iran and the rest of the world that had been negotiated by President Obama and a lot of European people,” he said. “It was working, so there was no need to rip it up… And this war has just resulted in much higher oil prices all over the world. And inflation has been one of the consequences.”

US President Donald Trump has repeatedly argued that the conflict is necessary for long-term peace and security.

Virgin Atlantic added the surcharge in May. It puts an extra £50 on an economy ticket, £180 on premium and £360 on a business class seat, a significant addition for any SME sending staff across the Atlantic regularly.

The scale of the fuel shock explains why. The European benchmark jet fuel price had been sitting at around $800 (£590) a tonne before the fighting began. It spiked to more than $1,800 in April and, while it has since eased, remains at roughly $1,450 a tonne.

Corneel Koster, Virgin Atlantic’s chief executive, told the BBC that at “this level of fuel price” surcharges were “absolutely required”. He added that it was “hard to be optimistic at this moment about the situation in the Middle East”, suggesting the charge will not be lifted soon.

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Virgin is far from alone. Our earlier coverage of airlines hit by the jet fuel price surge set out how carriers across Europe responded as the conflict took hold, and British Airways owner IAG has since warned that business class fares will rise as its fuel bill grows. Several of Virgin’s rivals cut flights as well as raising prices, and analysis by consultancy Teneo in April found the war had pushed air fares up by 25 per cent.

Winter schedules under pressure

The pressure has not gone away. This week Ryanair said it would scale back its winter schedule because of higher fuel costs and warned that European short-haul fares would “increase materially” if jet fuel prices keep rising through to next summer.

For UK firms, that raises the prospect of fewer seats and higher prices on European routes over the winter.

Virgin Atlantic, however, says it will not follow suit with sweeping cuts. Koster said winter capacity had already been trimmed slightly a few months ago and that the airline expects to operate 95 per cent of its normal schedule. He accepted that if demand on particular routes proved weak “in the depths of winter” there would be some further trimming, which he described as “capacity discipline”, but insisted this would not run to “big percentages”.

That is welcome news for transatlantic business travellers who rely on Virgin’s services to the United States, even if the surcharge means each seat costs more than it did a year ago.

The Team GB and ParalympicsGB deal, announced by the British Olympic Association, marks a notable change of allegiance. British Airways had carried the teams since the Beijing games in 2008, so losing the contract to its long-standing rival is a blow to its prestige. We reported the details when Virgin Atlantic replaced British Airways as the Team GB airline for LA28.

For business travellers, the practical takeaway is simpler. Fuel surcharges are now built into long-haul fares, airlines see no early end to the conditions behind them, and anyone booking winter travel should budget accordingly. Companies with significant transatlantic spend may want to check whether surcharges are included in any negotiated corporate rates.