Oil prices have risen dramatically since the start of the Covid-19 pandemic, and they have been exacerbated by the Ukraine-Russia war. As a result, the International Air Transport Association (IATA) has warned that as fuel prices rise, airline ticket prices will ‘undoubtedly’ rise. Domestic and international airfares in India have increased by up to 50% in recent months as a result of rising fuel prices.
According to the BBC, Willie Walsh, director general of IATA, these costs will be passed on to consumers. ‘ Flying will be more expensive for consumers, without a doubt,’ he said, adding that the ‘high price of oil’ will be ‘reflected in higher ticket prices’.
Airfares at American Airlines, Delta Air Lines, and United Airlines – the three largest US domestic carriers – increased nearly 50% year on year for the week ending May 23, according to a Cowen financial services firm analysis. Cowen used data from New York-based Harrell Associates, which tracks airline pricing trends, to track nearly 300 routes across four different fare categories for the carriers, CBS reported.
According to IATA, traffic in India fell by 0.3 percent month on month in May, but increased by 405.7 percent year on year. Oil prices were already rising as demand resumed in economies that had begun to recover from the Covid pandemic. The fallout from the Ukraine war has pushed prices even higher. According to the BBC, the United States has announced a complete ban on Russian oil imports, while the United Kingdom plans to phase out Russian supplies by the end of the year.
European Union leaders have stated that they will ban the majority of Russian oil imports by the end of 2022. This means that demand for oil from other producers has increased, causing prices to rise. According to the BBC, Walsh stated that fuel prices were at an all-time high and that ‘oil is the single largest component of an airline’s cost base. It is unavoidable that high oil prices will eventually be passed on to consumers in the form of higher ticket prices.’
International revenue passenger kilometres (RPKs) drove the global industry’s recovery in May, while the global domestic market remained flat, according to IATA. Several major international route areas outperformed in 2019, while many others likely returned to pre-pandemic RPK levels in June.
The global industry’s recovery has accelerated, with global international RPKs now at 64.1 percent of pre-crisis levels. In May, global domestic RPKs reached 76.7 percent of their 2019 level. Global RPKs increased 10.7 percent month on month in April 2022 compared to April 2022. (MoM). Despite inflation, high jet fuel prices, and low consumer confidence, the recovery is continuing. International bookings briefly surpassed domestic bookings in May, confirming that a strong desire to travel abroad remains, according to IATA.
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