EU261 in the Age of the Hormuz Blockade: How Airlines Can Protect Themselves Before the Crisis Peaks

This summer, air carriers could face a perfect storm: a fuel crisis triggered by escalating geopolitical conflict around Iran, the blockade of the Strait of Hormuz, and a wave of passenger compensation claims under Regulation 261/2004 (“EU261”) that many carriers may not be prepared to defend. With Middle East traffic already down 59%  and operational costs expected to go up by as much as 40% , the pressure on airlines is severe. However, the hidden liability may be even larger. The Airlines Council International Europe (ACI Europe) and the IATA have warned that if the situation around the Strait of Hormuz does not stabilise within the coming weeks, the EU may face a systemic shortage of jet fuel, with potential cancellations beginning as early as the end of May . The scale of disruption is already materialising: Lufthansa Group has announced the cancellation of approximately 20,000 flights between May and October 2026 across all six of its hubs, driven by the doubling of jet fuel prices following the escalation of the conflict around Iran . For airlines operating to or from the EU, the financial exposure is not just from lost revenue, but also from EU261 compensation claims, which could run into the tens of thousands.

If this prognosis becomes reality, most airlines risk severely disrupted operations during the summer holiday season, which is one of the busiest and most commercially critical periods in the aviation calendar. While the global commercial impact on the aviation industry is being widely discussed, the exposure under EU261 is not. To date, systemic fuel shortages have not shaped the interpretation of EU261, and that gap is precisely what makes the current situation so consequential. The existing CJEU case law has evolved in an environment in which fuel availability was largely assumed. The current crisis may therefore represent one of the first instances in which systemic energy supply constraints directly intersect with passenger compensation claims, leaving air carriers to navigate this uncertainty in real time, at scale, during the peak season. This article sets out why the fuel crisis is not a legal get-out-of-jail-free card under EU261, and what steps airlines should take today to protect themselves when the time comes.

Fuel Crisis ≠ Carte Blanche Under Extraordinary Circumstances

The financial exposure at stake is significant. EU261 compensation is fixed by statute, ranging from EUR 250 to EUR 600 depending on the distance. A single cancellation at peak summer load of a standard Boeing 737-800 / MAX, carrying 189 passengers, can expose a carrier to statutory compensation from EUR 47,250 to EUR 113,400 for that flight alone, before adding in mandatory care and assistance obligations (meals, accommodation, rebooking). If fuel disruptions affect even a fraction of EU summer departures, sector-wide exposure runs into hundreds of millions of euros.

Under the EU261 general framework, a carrier does not have to compensate passengers if it can demonstrate that the disruption was caused by extraordinary events not inherent in the normal exercise of the carrier’s standard operations and that could not have been avoided even if all reasonable measures had been taken . At first glance, it may appear that the global geopolitical tension and related fuel crisis naturally fall within this definition, given their external origin, systemic nature, and the fact that they are clearly outside of any carrier's control.

But the Court of Justice of the European Union (“CJEU”) has consistently taken a pro-passenger position and has made it clear that the concept of ‘extraordinary circumstances’ should be interpreted strictly and assessed on a case-by-case basis. Carriers cannot use the current fuel crisis as a blanket defence. Instead, the current legal framework provides a range of circumstances, only some of which may relieve carriers from the compensation obligation. Therefore, from a legal perspective, the concept of the fuel crisis should be assessed from two distinct angles: fuel price volatility and fuel supply disruption.

Fuel Price Volatility

Let’s be clear: cancellations driven by spikes in fuel costs will not constitute extraordinary circumstances under EU261. Constant variations in jet fuel prices are a normal and inherent characteristic of the aviation industry, driven by fluctuating oil markets, geopolitical events, and refining capacity constraints. Sharp price spikes, even those caused by geopolitical instabilities, remain a foreseeable feature of the market, particularly given the fragile world order of this decade. Therefore, airlines routinely have to adopt various hedging and optimisation strategies to remain operational on the market in view of such volatility.

Flight cancellations caused by elevated fuel costs therefore cannot satisfy the threshold of extraordinary circumstances. Such disruptions reflect commercial decision-making, not an operational impossibility. Any other interpretation would allow market fluctuations to serve as a blanket exemption from compensation liability. Such an outcome would directly conflict with the underlying purpose of EU261. Hence, carriers that attempt this defence are unlikely to succeed and will face adverse cost exposure in the process.

The Lufthansa Group's recent decision to cancel approximately 20,000 flights between May and October 2026 stands out as a strategically sound move in this crisis. By acting early, Lufthansa has effectively confined its compensation exposure to a limited number of flights in early May that fall within the fourteen-day notification window under Article 5(1)(c) of EU261. Contrast this with the alternative: waiting, hoping that the crisis resolves itself, and then – if it doesn’t – cancelling flights days or even hours before departure, maximising both operational chaos and compensation exposure per flight. Lufthansa's approach should not be treated as a sign of panic, but rather as a playbook – proactively restructuring the schedule at a point where the legal and commercial consequences can still be managed. Carriers facing similar pressures would do well to take note.

Fuel Shortage and Supply Disruptions

A more complex analysis applies when the fuel crisis results in actual supply disruptions or shortages, especially where the impact is not pervasive but affects a specific region or airport. In such cases, the analysis is heavily fact-dependent and should be evaluated on a case-by-case basis for each disruption. Sudden, documented, and verifiable difficulties in obtaining aviation fuel, caused – for example – by restrictions affecting transit routes such as the Strait of Hormuz, may potentially be viewed as external events beyond the carrier’s control and, therefore, qualify as extraordinary circumstances. However, this defence is not automatic.

To defend compensation liability in such a case, the carrier should demonstrate that the fuel supply shortage or disruption (i) could not have been reasonably foreseen, (ii) could not have been reasonably prevented by implementing reasonable measures like strategic planning or alternative routing, and (iii) directly caused, rather than contributed, to the flight cancellation. Without credible and specific evidence, courts will readily treat these events as operational risks inherent to the aviation industry.

Geopolitical Crisis and Airspace Constraints

Another defence worthy of attention is the intersection of geopolitical events with airspace constraints. Although a geopolitical crisis may not in itself be sufficient to relieve a carrier from its compensation obligation, courts will more readily accept the extraordinary circumstances defence where aviation or state authorities have imposed formal operational constraints in response to a crisis, such as, for example, airspace limitations or closures, regulatory restrictions, or border closures.

That said, carriers should not assume that any airspace restriction automatically provides a complete defence. Jurisdiction matters significantly. Czech courts, for instance, have adopted the position that carriers can only rely on extraordinary circumstances in such scenarios if the airspace restriction affecting the particular flight was imposed for at least two hours. A restriction of shorter duration, even a genuine and externally imposed one, will not suffice. Airlines operating across multiple jurisdictions should therefore understand that the same underlying facts may yield different legal results depending on where the passenger brings the claim.

A Practical Playbook: What Airlines Need to Do Now

Based on experience of handling EU261 passenger claims, air carriers do not usually lose EU261 court claims because the circumstances fall short of the ‘extraordinary’ threshold; they lose because they cannot prove it. Critical evidence is often not collected in the moment or cannot be retrieved when the claim is ultimately defended, sometimes months or even years after the disruption. The takeaway is simple but consistently overlooked: if carriers want to defend disruption claims, they should treat evidence collection and retention as a real-time operational priority, not a post-crisis afterthought.

Fixing this requires more than just better record-keeping; instead, a shift in mindset is needed. A defensible strategy starts with moving from a ‘crisis-based’ to a ‘cause-based’ approach. General references to fuel shortages or geopolitical instability will not likely hold in court. Carriers should demonstrate specific operational triggers that affected or disrupted each individual flight. This, in turn, requires an evidence-focused approach initiated at the time of disruption, not during subsequent claims handling. In practice, this means proactively collecting and retaining certain categories of evidence:

Proof of fuel supply shortage: written correspondence with fuel suppliers confirming inability or refusal to supply fuel, records of fuel orders placed and rejected, or any notices from airport operators indicating limited or exhausted fuel stocks. Where possible, evidence should come from external and third-party sources rather than internal carrier records, as courts tend to place greater weight on external and independent records/report.

Carrier’s record of operational decision-making: dispatch logs, captain’s reports, communications between operations control and ground handling, and documented reasons for the delay or cancellation recorded at the time of the event. These records establish causation and demonstrate how the fuel-related issues led to a specific operational constraint affecting the specific flight.

Proof of attempted mitigation: documentation of efforts to source fuel from alternative suppliers or nearby airports, adjustments to flight planning (such as technical stops or tankering strategies), consideration of alternative aircraft or routes, and internal assessments explaining why such measures were not feasible. This is one of the essential categories of evidence as it would help to satisfy the requirement that all reasonable steps need to be taken to avoid the disruption. Its absence can significantly undermine an otherwise viable defence.

Regulatory evidence: NOTAMs, airspace restrictions, governmental or aviation authority notices, and communications with airport authorities. These documents establish the external nature of the events, which are particularly critical where the disruptions are linked to broader geopolitical or security matters.

Ultimately, a defensible case is built at the time of the event, not reconstructed after the fact. Circumstances may set the stage, but they rarely win cases on their own. Carriers that treat disruption management and evidence collection as a single, integrated process will be far better placed to substantiate extraordinary circumstances when challenged. Others will be forced to learn the hard way that even the strongest underlying events are of little value without supporting evidence.

The geopolitical situation around Iran and the Strait of Hormuz may be unprecedented in its pace and scope, but the EU261 legal framework has not changed. The crisis is live, the summer season is weeks away, and claim farming agencies will not think twice before filing their EU261 claims. The carriers that will emerge from this summer in the strongest legal position are those that will start building their defence at the time of disruption, not after the pre-litigation notices and claims start piling up. So if a carrier does not yet have a disruption evidence collection practice in place, that conversation is already overdue.

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