BANGKOK, 7 June 2018: No matter how you look at the oil price graph travellers will be paying more for their air travel than they did a year ago.
That’s the warning from Oilprice.com, an energy industry online news service, following data released by IATA.
During its annual general meeting in Sydney, earlier this week, the International Air Transport Association presented the cautious scenario that we will be paying more for air travel probably through 2019.
The downside is the need to look down track and firm up your travel dates. If that is possible then taking advantage of the many Facebook offers floated by airlines this month would probably secure a fare bargain for travel end of the year through to March 2019.
Oilprice.com cautioned that the “oil price run over the past year will result in higher fares even if many airlines have hedged fuel at lower prices.”
In its assessment released Monday, IATA estimated that this year airlines will spend a combined USD 188 billion on fuel, up by 26.1% compared with the US$149 billion spent on fuel last year.
This year’s fuel spend could account for 24.2% of total average operating costs, compared to 21.4 % of total costs in 2017.
Hedging is a short term measure. It gives airlines a breathing space to adjust to oil price volatility, but according to experts in the long-run fares will increase.
According to IATA, the average jet fuel price ended the week, 25 May, at USD 91.50 a barrel, down by 2.6% week-on-week, but up by 44.6% compared with the same week last year.
In the long-run the trend could cause fuel costs to increased 50% on what they were in June 2017. That will translate into hefty fare hikes and fewer travel promotions.
Airlines are also worried that higher air fares will dampen demand for air travel after two to three years of robust customer demand.