Begin typing your search...
Airlines defend high fares despite oil price slide
Oil prices have tumbled practically week on week in the past few months the world over.
By
migrator
migrator
Singapore
However, there has been no concurrent fall in air fares. Politicians and consumer groups in the United States and Europe have called on airlines to cut air fares, after Brent (global cost benchmark) tumbled from US $ 114 to US$ 30. Countering allegations of profiteering from tumbling fuel costs, leading airlines say a climbing dollar rate is a major factor in fares remaining high.
Industry profitability remained fragile, despite a record $36 billion in airline industry profits forecast for 2016, said Tony Tyler, director general, the International Air Transport Association (IATA).
“Certainly lower oil prices have helped, but that impact has been delayed and diluted in many parts of the world due to forward hedges at higher than market rates, as well as the rise of the US dollar against local currencies,” Tyler said on the eve of the Singapore Airshow.
SKY HIGH RATES
- Brent oil prices tumbled from $114 in mid-2014 to around $30 this week.
- Last year when Brent was $53 a barrel, UK Finance Minister George Osborne tweeted: “Vital this is passed on to families at petrol pumps, through utility bills and air fares”.
- On Sunday, Graham Stringer, a member of the UK parliament’s transport panel, told Britain’s Sunday Telegraph airlines were exploiting passengers by failing to pass on lower fuel costs.
- Airlines cite high capital costs, regulatory constraints and intense competition.
- IATA says a chunk of this year’s profit projection of $19.2 billion to come in from North America.
- Southeast Asia burdened by high dollar rate, some 20 percent against regional currencies in the last 18 months.
Visit news.dtnext.in to explore our interactive epaper!
Download the DT Next app for more exciting features!
Click here for iOS
Click here for Android
Next Story
