War in the Middle East and rising fuel prices affect air travel with ticket prices not saying to fall.
A new reality is formed for travelers worldwide: increased charges, limited flight options and dilemmas about whether a trip is ultimately worth its cost.
The cause is identified in high fluctuations in oil and air fuel pricesn, which were launched after the outbreak of the Middle East war and conflicts near the Straits of Hormuz — a key point for global oil supply.
«The instability is the key to the case.», reports Shye Gilad at AP, former aircraft governor and current professor at Georgetown University's business management school. «Right now, airlines try to bet on future developments».
Companies react cutting routes and adjusting prices. According to experts, these changes will unevenly affect the market, but will eventually touch almost every category of traveler.
Low-cost airlines (budget airlines) and passengers who prefer them expected to be hurt first and more. However, neither its travelers Distinguished position (premium cabins) will escape the increases and the less convenient routes.
The price thriller
Oil prices have recorded up and down in recent weeks. After briefly exceeding $191 a barrel, they retreated Wednesday under $95, after Trump announced a two-week truce in the Middle East. But uncertainty remains, especially after Iran's re-closure of the Straits in response to Israeli blows in Lebanon.
«When prices change sharply in both directions, it is very difficult for companies to predictrod», explains Gilad. This explains why there is a time delay between the fall in oil prices and the corresponding reduction in ticket prices. Airs may take months, or even a year, to adjust fares, awaiting the stabilisation of the energy market.
«With fuel costs at these levels, nothing can be considered temporary»Delta Air Lines CEO Ed Bastian stated, following the company's decision to increase charges for delivered luggage.
Global pressure, local effects
Bastian noted that high fuel prices are expected to add $2 billion to Delta's operating costs only for the second quarter. Accordingly, the CEO of United Airlines, Scott Kirby, warned staff that if prices remain high, the annual extra cost would reach $11 billion — amount more than twice the company's profits in its most profitable year.
According to the International Air Transport Association (IATA), the average global price of air fuel reached $209 per barrel last week, from about $99 in late February.
This cost is already passed on to passengers. Companies such as Delta, United, Southwest and JetBlue increased baggage charges. United went one step further, applying the model «Just pay for what you want.» and premium positions, converting benefits such as selection of a post or tickets with the possibility to refund money to optional additional charges.
At international level, Cathay Pacific increased fuel levels by 34%, while Air India, Emirates, Lufthansa and KLM also went on to adjust to cope with instability.
Route cuts for saving resources
For many, the problem is not only money but also uncertainty. Bill Moorehouse, an executive in a technology company, travels regularly for work. «When you have a strict schedule, you don't want unsettling factors. Now you feel like everything can go wrong.», says he, currently choosing to stay close to his base.
The airlines reduce their flight workBNP Paribas estimates that world routes for April decreased by 5% against initial design. The largest cuts are made in the Middle East, but also in Europe, Asia and North America.
United Airlines temporarily suspends less profitable routes, targeting mainly night flights and low traffic days (Tuesday, Wednesday, Saturday). Delta, for her part, canceled plans to increase seats this summer.
Travel in «air»
These movements indicate that large companies are better able to withstand the crisis than low-cost, which have less room for manoeuvre.
«Recreation travelers and financially sensitive passengers will feel it more, because The additional cost may be the determining factor in whether to travel or not.I», notes Gilad.
