According to Alan Joyce, CEO of Qantas, airlines may be obliged to raise tickets as a result of the rising cost of oil, which will result in higher fuel expenses for operators.
According to Mr Joyce, who spoke at the Australian Financial Review Business Summit 2022, while the impact of rising oil costs on airlines is not as severe as it is on cars, it will still have an impact on the bottom line.
“Unfortunately, if they [oil prices] continue to rise at their current levels, airfares will have to rise as well, and we’ll have to pass those increases on to our customers,” Mr Joyce added.
If it goes even farther – for example, if a barrel of oil costs $US 4 per barrel, airfares will have to rise by another percentage point.”
“I believe it will have an impact on the amount of travel that takes place out there.”
As a result of the many COVID-19 lockdowns, Mr Joyce believes that the possibility of higher airfares will be outweighed by the great demand that will result as Australians resume to regular travel.
“A final point to mention is that a great deal of this is dependent on consumer demand. In fact, demand is now outpacing supply at the time “Mr. Joyce expressed himself.
The demand for our products in London and the United States – which accounts for half of our foreign business – is greater than our ability to meet it at the present.
Our ability to raise those airfares, as well as our ability to recoup the money that is lost on overseas flights
The likelihood of oil prices continuing to climb appears to be on the verge of becoming nearly unavoidable.
Overnight, the United States and the United Kingdom announced that they will prohibit the import of Russian oil, a drastic measure intended to destroy Russia’s economy from within.
Putin’s war will not be subsidized by the United States, President Joe Biden declared on Monday.
“Defending freedom will come at a high price. It will have an impact on us here in the United States as well.
The Kremlin responded overnight by predicting that oil prices will soar to near-catastrophic levels of $US 300 per barrel as a result of the bans.
According to Russian Deputy Prime Minister Alexander Novak, a rejection of Russian oil would have “catastrophic consequences” for the world market if it were to occur. Novak made the remarks in an address broadcast on state television on Monday.
“The increase in prices would be unforeseen,” says the author. The price per barrel would be at least $US 300, if not more.