The director-general of IATA, the world’s leading airline association, today said a rise in airfare prices is “inevitable” given the surge in hydrocarbon prices caused by the Middle East war.
The price of a barrel of kerosene — a petroleum derivative — has doubled since the US-Israeli strike against Iran on February 28, a rise even steeper than that of crude oil, Willie Walsh noted during a conference organised by the Professional Association of Aeronautical and Space Journalists. Airlines had planned to dedicate an average of 26% of their operating costs to fuel this year, based on a kerosene price of $88 per barrel — a figure that had already surpassed $216 on Thursday.
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“You don’t need to be a genius to deduce that the additional costs airlines will have to face, if the situation persists, will be far greater than what they can absorb,” said Walsh, whose association groups 360 carriers representing 85% of global traffic. He confirmed that “it is inevitable that ticket prices will rise,” a trend already being felt in some markets, particularly the United States.
Walsh described the current crisis — which is mainly affecting Gulf carriers forced to cancel a large proportion of their flights — as having “nothing to do with Covid,” comparing it instead to the September 11, 2001 attacks, when transatlantic routes collapsed for several months.
He nonetheless said that “underlying demand remains robust” for air travel, even if rising ticket prices “have consequences” for consumer behaviour. In crises like this, “people keep travelling, but they take shorter trips,” he said.
