A five per cent hike in fares is the only way airlines around the world can offset the continuous surge in fuel prices, according to a senior International Air Transport Association (IATA) official.
Gulf News quoted the chief economist of Iata as saying that a surge of more than 50 per cent in fuel costs over the last 12 months has left airlines with no other choice.
"With no sign of a significant decline in oil prices that are staying stubbornly above $100 a barrel, airlines are fighting to stay profitable and have pushed up ticket prices in order to recoup costs. They have had no choice but to hike fares," Brian Pearce was quoted as saying by Gulf News.
"We are looking at a fare increase of at least five per cent. We have seen a five per cent increase in unit costs because of the rise in jet kerosene and that is with the [airline] industry having hedged 50 per cent of this year's fuel bills. So we are going to see that five per cent reflected in airfares," he added.
Region’s most popular carrier Emirates has increase its fare by 15 per cent this year, but the airline’s top boss says it would be difficult to stay afloat if fuel prices continue to sky-rocket.
"We may have to tend to our costs if oil prices go up to $150-$160 per barrel. And as long as the fuel stays at $100 per barrel plus, the whole industry is going to face real problems," said Tim Clark, Emirates airline president.
Echoing the sentiment, Alan Joyce, chief executive of Qantas, said the industry will witness further price increases this year. The Australian carrier has gone through a number of fare increases and fuel surcharge increases already this year.