Bad news for air travellers: Ticket prices to soar as fuel prices rise
New Delhi, July 23: The IATA chief recently warned that the prices of airline tickets will go up "without doubt" as fuel costs rise. Oil prices have jumped as economies recover from the Covid pandemic and also due to the war in Ukraine.
These costs will be passed on to consumers, Willie Walsh, director general of the International Air Transport Association (IATA), said, reports BBC. "Flying will be more expensive for consumers, without doubt", he said, adding that the "high price of oil" will be "reflected in higher ticket prices".
Due to the rise in fuel prices, domestic and international air fares in India have witnessed a surge by up to 50% in the last few months.
Air fares at American Airlines, Delta Air Lines and United Airlines - the three largest US domestic carriers - shot up nearly 50 per cent for the week ending May 23 compared to a year ago, according to an analysis by Cowen, a financial services firm. Cowen tracked nearly 300 routes across four different fare categories for the carriers using data from New York-based Harrell Associates, which tracks airline pricing trends, CBS reported.
A 0.3% MoM decrease was registered in India in May, in YoY terms traffic increased by 405.7% in this domestic market, as per IATA.
Oil prices were already rising as demand picked up again in economies that had started recovering from the Covid pandemic.
The fallout from the war in Ukraine has pushed prices up further. The US has announced a complete ban on oil imports from Russia, while the UK is to phase out Russian supplies by the end of the year, BBC reported.
European Union leaders have said they will block most Russian oil imports by the end of 2022.
This means demand for oil from other producers has increased, leading to higher prices.
Walsh said fuel prices were at record highs, and that "oil is the single biggest element of an airline's cost base", BBC reported.
"It's inevitable that ultimately the high oil prices will be passed through to consumers in higher ticket prices."
International revenue passenger kilometres (RPKs) continued to drive the global industry's recovery in May while the global domestic market trended sideways, IATA said. Several major international route areas overperformed 2019 levels while many others likely reached pre-pandemic RPK levels in June.
The global industry's recovery accelerated and global international RPKs are now at 64.1% of pre-crisis levels. Global domestic RPKs reached 76.7% of the 2019 level in May. Compared to April 2022, global RPKs grew 10.7% month-on-month (MoM).
The rebound continues despite inflation, high jet fuel prices and low consumer confidence. International bookings briefly exceeded domestic bookings in May, confirming that a high willingness to travel abroad persists, IATA said.