Low oil prices to save airlines billions

Passengers will demand lower airfares if oil prices stay low
If oil prices remain low this year, and there is every expectation that they will, airlines around the world could save $12 billion. But passengers will also expect cheaper fares.
Crude oil prices fell to a 12-year low in January, as global demand weakens and additional supply comes from Iran.
“If sustained, the most recent declines in oil prices would reduce the industry’s annual fuel bill by approximately US$12bn in 2016,” the International Air Transport Association says in its latest Financial Monitor report.”
However, airlines’ fuel hedging contracts may delay the benefits of the drop in oil prices, IATA added.
Passengers are already starting to see these cost savings have an effect on ticket prices, with average global airfares falling 12% year-on-year in the first 11 months of 2015 – when reported in US dollar terms. Once the appreciation of the dollar against other currencies is taken out of the equation, fares were just 5% lower.

Leave a Reply