EconomyFinancialAirlines anticipate higher fares due to rising energy costs

Airlines anticipate higher fares due to rising energy costs

Airlines will pass on rising oil prices to passengers through higher fares relatively quickly, but rising energy costs will worsen the overall outlook for the sector in 2022, according to the director of the International Transport Association. Air (IATA, for its acronym in English).

After JetBlue launched a counter bid for US low-cost carrier Spirit Airlines, JetBlue CEO Willie Walsh also said he sees more room for consolidation among US carriers.

“The market has been caught off guard,” Walsh told a briefing. “It’s proof that the financial strength of US airlines stands apart from the rest of the world,” he said, adding that consumers had benefited from large investments in new products.

Airlines are grappling with a surge in crude oil prices, which has accelerated following Russia’s invasion of Ukraine, a move Moscow describes as a “special military operation.”

The rise has worsened a picture that was already expected to include an industry-wide loss in 2022, though some airlines will make a profit as the world stages an uneven recovery, Walsh said.

IATA said global passenger traffic rebounded in February as the impact of the omicron variant of the coronavirus receded outside of Asia. The war in Ukraine has not yet moved into the monthly data.

In February, passenger traffic stood at 54.5% of the levels seen in the same month of 2019, up from 50.6% in January, but down from 55.1% in December. The load volume stood at 111.9%.

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