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28 March 2024

Oil dips, but air tickets stay high

Published
By Staff

Oil prices have plunged to their lowest level in more than four years, but air tickets remained relatively high as most carriers have not cut their fuel tax.

“Regional airlines have not changed their fuel tax despite the large decline in oil prices. Some carriers have only made price offers to certain destinations to spur weak demand during this season,” said Samer Asha, director of Skyline travel agency.

“Airlines should revise their ticket prices by cutting fuel tax following the sharp fall in crude prices since petrol is a key part of their operation costs. Oil prices could even drop further in the next period according to global forecasts,” he told Dubai-based Arabic language daily Emarat Al Youm.

The paper quoted another travel agent in the UAE as saying regional airlines have not even considered cutting their fuel tax despite the plunge in oil prices.

“They have to start revising their fuel tax because fuel accounts for a large part of their operational costs. It could be as high as 40 per cent in some airlines,” said Yassin Diab, director of Al Faisal travel agency.

“I think such a decision will take time because the fuel tax system is linked to contracts signed by airlines with suppliers. I believe if oil prices remain low, air tickets will be cut in the next period,” he said, adding that demand for travel would remain stable and could even rise in the next two months on the grounds prices are below their level during the peak summer season.

Another travel agent said most airlines had increased fuel taxes following the surge in oil prices in the past few years.

“They should now act and cut the fuel tax after the large decline in crude prices,” said Mohammed Al Rayes, deputy CEO of Al Rayes Holidays.

Emarat Al Youm quoted an Emirates spokesman as saying the carrier had made some price offers to specific destinations as part of a long-standing strategy to encourage travel worldwide.

It quoted another official at Abu Dhabi-based Etihad as saying the company is “closely” watching the oil price market developments to be able to compete in markets where it operates. The official fell short from saying whether Etihad would cut the fuel tax.

(Image courtesy Shutterstock)