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Increased Ticket Prices Anticipated Due to Rising Fuel Costs, IATA Director Warns
The director general of the International Air Transport Association (IATA), Willie Walsh, has stated that the ongoing rise in fuel prices will likely lead to higher ticket costs for air passengers. Walsh addressed these concerns during an interview with the BBC, highlighting that airlines cannot continue to absorb the escalating costs associated with fuel disruptions.
Walsh remarked, “There’s just no way airlines can absorb the additional costs they’re experiencing,” adding that while some airlines might reduce prices temporarily to stimulate passenger traffic, the long-term trend points towards increased fares. He emphasised that the high price of oil is inevitable for ticket prices moving forward.
He also noted the possibility of shortages in jet fuel during the peak summer period if alternative supply sources are not established promptly, although he downplayed the likelihood of widespread flight cancellations. Walsh’s comments come on the heels of British Airways’ parent company, International Airlines Group (IAG), indicating potential profit impacts due to soaring fuel costs, with an anticipated additional expenditure of around €2 billion (£1.72 billion) exceeding its fuel budget for the current year.
Despite these challenges, IAG’s chief executive, Luis Gallego, assured that there would be no disruptions in jet fuel supply over the summer season. In a related statement, Transport Secretary Heidi Alexander outlined the government’s efforts to mitigate fuel shortages, sharing that increased imports from the United States have been secured and local refineries have heightened their output.
To further assist airlines, the Government is implementing temporary regulations that allow the consolidation of passengers from different flights onto fewer aircraft, a measure introduced in response to rising flight cancellations. Data from aviation analytics firm Cirium revealed that UK carriers had already scrapped 296 departures in May, representing 0.75% of their total scheduled flights, a rise from 120 cancellations noted just a week prior.
Looking ahead, the number of scheduled flights for the busy summer months seems to remain relatively stable, with only slight reductions in the number of outbound services set for June, July, and August. Airlines maintain the ability to cancel flights without financial penalty if they provide more than two weeks’ notice.
Jet fuel prices have increased significantly since the escalation of tensions in the Middle East, with control of shipping routes through the Strait of Hormuz being a central concern. A spokesperson from the Government stated that UK airlines are currently not facing fuel shortages, underscoring that aviation fuel is typically purchased in advance, and suppliers maintain adequate stock levels to ensure operational resilience. Efforts to adjust flight schedules are also underway to prevent last-minute disruptions for holidaymakers.
