Airfares to Rise as Oil Prices Rise

According to IATA, significant price increases are anticipated in the following months as a result of the rise in oil prices

FREMONT, CA: Willie Walsh, the Director-General of the International Air Transport Association (IATA), stated that as long as fuel costs rise, travel expenses will definitely climb. As the single largest component of an airline's cost base, the increase in oil prices will lead to higher ticket prices. Flights are getting more expensive because of the high price of oil and it is becoming evident that that will be reflected in higher ticket prices.

According to IATA's Jet Fuel Price Monitor, the ongoing conflict in Ukraine has caused a record rise in oil prices and a concomitant rise in jet fuel prices, with Brent crude at USD 105.37 and jet fuel at USD 150.69 in the North American market, both 82 percent higher than the same period in 2021. In addition, the faster growth in demand for air travel and the concurrent closure of the Russian and Ukrainian airspaces, which forced airlines to fly longer routes to avoid the conflict zones, have contributed to the increase in prices. The industry could now experience a second recession as a result of the continued increase in fuel prices. When energy prices increase, it becomes more expensive to transport passengers and cargo. Increasing fuel costs had an effect on more than just airlines; they also had a ripple effect on the industry's recovering ground aviation service providers and other stakeholders.

While some airlines, like the Dubai-based flydubai, have chosen to wait to raise their costs in anticipation of more price changes, others, like Emirates Airline, have begun charging a fuel fee of USD 68 to USD 157 on a limited number of itineraries. The official airline of the United Arab Emirates, Etihad Airways, has continued to demand a USD 49 premium on flights between Abu Dhabi and Delhi.

Weekly Brief