easyJet predicts higher fares
25.07.08
easyJet said yesterday that fare increases were inevitable this winter as its chief executive gave warning that the high price of oil would reduce choice for travellers, the Times reports. The comments follow similar statements from airlines including British Airways and Virgin Atlantic, although with the weakening economy, it is difficult to see how this will be accepted by the travelling public.
The budget airline's chief executive, Andy Harrison, said that fuel costs would cause some of the most exposed airlines to go out of business. He said: ‘easyJet doesn’t set air fares, we accept the market price. We expect a significant reduction in supply [of seats] so there will be an increase in market prices next year. If oil prices remain high a lot of airlines will cut back capacity or go out of business, leading to higher fares.’
Mr Harrison said that it was difficult to say by how much fares would increase, as the impact of higher jet fuel prices was different for every airline. At easyJet, the increase in fuel is costing about £7 a seat on every flight, a figure that it has partly offset through the introduction of charges on bags checked into the hold.
The newspaper says that easyJet is pinning its hopes on a soft landing as holidaymakers switch from long-haul trips to short-haul journeys, as the cost of flying increases dramatically. ‘It is going to be a lot more expensive to fly to Miami for winter sun than Italy,’ Mr Harrison said.
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