News

Ash disruption set to increase air fares

27 Apr 2010 by BusinessTraveller

New research has revealed that European air fares could increase by 5.2 per cent this year, a result of increasing oil prices and the costs incurred by airlines by the volcanic ash disruption.

The research, carried out by the Centre for Economics and Business Research on behalf of shopping comparison site Kelkoo, suggests that UK travellers can expect to pay an additional £1.8bn on flights in 2010, or an average of £48 per passenger.

This represents an increase of 5.2 per cent in fares this year, and the research suggests fares will continue to rise over the next few years, with an increase of 11.5 per cent expected by 2012.

Commenting on the research Bruce Fair, Managing Director of Kelkoo UK said:

“Most airlines were already struggling prior to the [volcanic ash] crisis, but this, combined with soaring oil prices will have a knock on effect on consumers as carriers are forced to pass on rising operational costs to passengers. Oil prices – the main cost factor for carriers, and representing 33 per cent of total operating costs – are up by more than 74 per cent in the first quarter of 2010 compared to Q1 2009. 

“Additionally, increasing competition and falling demand mean that airline operators have struggled to remain profitable. Profit margins have been under pressure for some time as established carriers had to adjust their business models following the market entry of low cost airlines in the 1990s.”

For more information visit cebr.com, kelkoo.co.uk.

Report by Mark Caswell

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