Sign up FAST! Login

Experts Say Air Fares Unlikely to Mirror Dropping Oil Prices

Experts Say Air Fares Unlikely to Mirror Dropping Oil Prices TravelPulse


Airlines are unlikely to cut fares following the dramatic fall in oil prices, aviation experts said on Tuesday, despite calls from politicians and consumer groups to pass on the savings to passengers.

The global airline industry is expected to report a near $5 billion increase in profits this year to $25 billion, benefiting from cheaper fuel after crude oil prices slumped 60 percent since June last year.

Executives and analysts at the Airline Economics conference in Dublin said carriers would keep prices high as long as there was sufficient demand, except when paring back fuel surcharges on long flights.

"Ticket prices are market-driven not cost-driven," said Peter Davies, former chief executive of Air Malta, adding that lowering fares was not necessarily the correct response to lower oil prices.

Ted Christie, chief financial officer at low-cost carrier Spirit Airlines, said airlines had "very expensive systems and people thinking about how to maximise revenue, and they should do that regardless of the oil price."

Politicians and consumer groups in the United States and Europe have called on airlines to cut fares. New York Senator Chuck Schumer called for a federal investigation into why lower fuel costs were not being passed on to passengers last month.

Stashed in: Economics!, Transportation!, Price Is Right!

To save this post, select a stash from drop-down menu or type in a new one:

Something needs to disrupt the airline industry. Uber pls?

You May Also Like: