How Rising Oil Price Will Affect Air Travel
The rise in the price of crude is good news to the global economy, especially that of Nigeria. But some sectors may only see negative impact of the rising fortunes of the crude.
Such sectors include the aviation sector which is putting the squeeze on airline costs and is likely to lead to a rise in air fares, industry executives have said.
International Air Transport Association Chief Executive Officer, Alexandre de Juniac said in Singapore on Monday that he believed there was a consensus among airlines that an oil price of around 65 to 70 dollars remained “acceptable” but not above that.
“It is not so much a competitive differentiator for an airline. It puts pressure on costs and it is more a fare inflation trigger,” he told reporters on the sidelines of a conference ahead of the Singapore Airshow.
The oil price, which typically accounts for around 30% of an airline’s costs, has risen 52% since June 2017 to around 68% a barrel.
However, airlines said the higher oil price was proving financially damaging because fare increases had so far failed to keep pace with the oil price rise.
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