American Airlines warned that flight prices will soon rise
American Airlines CEO Doug Parker said that because of rising oil prices, the cost of air travel may soon increase, not only in the company he runs, but in the entire industry.
Oil prices in June 2018 year on 50% higher than in the same month in 2016 year, writes Daily Mail.
“If it becomes clear that this is the new normal, you will see less opportunity and growth in the industry over time and therefore higher prices,” Parker said.
Analytical company IATA in June changed its forecast for the relative total profit in the aviation industry, now experts assume that by the end of 2018, it will be 33,8 billion, although in December it was expected that profit in the industry in 2018 would be 38,4 billion.
Airlines are facing cost increases due to rising fuel prices, which are expected to grow by about 25% this year.
According to IATA forecasts, the average price of a barrel of oil Brent, which is the global benchmark, will be 70 dollars for the 2018 year, which is 28% more than in the 2017 year. 4 June oil price Brent in the Asian market exceeded 76 dollars per barrel.
Rising oil prices are not the only problem facing the aviation industry.
Brexit and the US withdrawal from the deal with Iran also affected air travel, as the rules for flights over some countries changed, borders were closed, and all this indirectly affects the aviation industry, which is quite successful in terms of overall performance.
According to the CEO American Airlines, ticket prices currently cover the cost of flights, even after the rise in oil prices, but the company's profits have declined significantly, since the cost of fuel is the second largest expense for airlines.
The carriers have said that they are working not to raise prices, but they do not give any promises.
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