The International Air Transport Association (IATA) has said that the high price of oil in the global market will shoot up the price of airline tickets.
In an interview with the BBC Sunday Morning programme, monitored by Reuters, the Director-General of the IATA, Mr. Willie Walsh, said that oil is the single biggest element of an airline’s cost base.
Flying will be more expensive for consumers, “without doubt”, he said. According to him, it is inevitable that high oil prices will be passed through to consumers in higher ticket prices.
“It’s inevitable that, ultimately, the high oil prices will be passed through to consumers in higher ticket prices,” Mr. Walsh added.
Surging oil and gas prices, exacerbated by Russia’s military offensive in Ukraine and increased demand from economies recovering from the Covid-19 pandemic, have fed into rising global inflation.
Brent, the benchmark for more than two thirds of the world’s crude, rose to a notch under $140 a barrel in March. It has given up some gains since then, but is still trading around the $105 mark, Reuters said
Inflation globally has risen sharply amid a steep rise in the prices of food and other commodities since the Ukraine conflict began in February.
Inflation this year is forecast to reach 5.7% in advanced economies and 8.7% in emerging markets and developing economies, according to the International Monetary Fund. Pent-up demand to drive travel recovery ‘despite inflation and war risks’
IATA has warned at its annual general meeting in Doha last month that among the many negative effects of an escalation of the Russia-Ukraine war on aviation, rising fuel costs and dampened demand owing to lowered consumer sentiment would be paramount.
Still quoting IATA’s meeting in Doha, the report further said that fixing battered balance sheets carrying $650 billion in debt would be another major challenge for airlines this year.
are expected to post $9.7billion in collective losses this year, a sharp improvement from about $42billion in losses in 2021, Mr. Walsh said in Doha. Holidaymakers need to be prepared for the cost of flights to go up, Mr. Walsh told the BBC.
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