BA exec: air fare rises ‘inevitable’
15.05.08
British Airways head of sales Drew Crawley has warned of the inevitability of further air fare rises. Speaking at the annual Guild of Travel Management Companies' annual conference in Istanbul he said that his view was based on 'the inexorable rise in aviation fuel costs caused by surging demand for oil'.
Mr Crawley said that BA's fuel bill in 2009 would be $3bn, a huge increase from last year's $1bn. He said: ‘At an oil price of $117 a barrel, a 10% operating margin goes down to break even.’ [The oil price passed $126 earlier this week and shows no sign of retreating in the near future.]
He said that the cash flowing out of the airline industry as a result was greater than following the September 11 attacks, when aviation last went into a downturn, and warned: ‘The challenge requires us to continue to review our business. We have a toxic mix between weakening revenues and increasing fuel costs.' However, he added that increasing consolidation in the aviation sector would lead to reduced operating costs.
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