Prices on Airline Tickets Expected to Increase
With the increase in oil prices from $45 to more than $65 per barrel since last year, the travel industry is anticipating significant increases in ticket prices from airlines, a message the airline industry has been speaking to directly. Whether the increases are in the form of fuel surcharges, discouraged previously by the DOT on domestic flights, or higher ticket prices – or both– isn’t yet clear.
Airline executives have indicated that improved profitability will enable them to weather the price increases, and they still predict a profitable 2018; however some airline executives have cited concern over increases of as much as 50 percent in fueling their planes, and sustaining their profit forecasts.
In some markets around the world, especially to Europe, the incentive to raise pricing may be detained with the competition from low-cost start ups, and more start-ups, which generally are of the “no frills” variety, are being talked about. On routes where competition is not as fierce, however, some price increases have been already been noted.
As the summer travel season is looking to be a record in travelers served, no doubt fuller airplanes will continue to be the case. Compared to the same three-month period last year, there is an increase of 100,000 more fliers per day in the US alone.
On international tickets to Asia, fuel surcharges that have increased fares by about 15% have been seen recently. On the other hand, at least one CEO indicated improving fuel efficiency with newer aircraft was their focus.
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