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Tue 16 Dec 2014 11:42 AM

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Airfares will be lower in 2015 as a result of falling oil price, says UAE official

No safety concerns in the UAE airspace from increase in number of planes, adds UAE’s General Civil Aviation Authority

Airfares will be lower in 2015 as a result of falling oil price, says UAE official
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The UAE’s General Civil Aviation Authority expects airfares to drop next year, as a result of the fall in price of oil.

Speaking to Gulf News, Saif Mohammad Al Suwaidi, Director-General of the General Civil Aviation Authority, said passengers should see cheaper airfares at some stage next year.

“It will be a positive effect starting from next year. We will see a drop in ticket prices,” Al Suwaidi said, echoing comments made last week by Brian Pearce, chief economist at International Air Transport Association (IATA).

“It will be good for the airline sector. We are expecting a passenger growth of 10-12 percent next year,” he added.

Al Suwaidi said he does not have any safety concerns about the increasing number of planes using the region’s airspace, which was one of the concerns raised by IATA last week.

“We always monitor operators and ban those not complying with our safety standards,” he said.

The drop in oil price, due to a combination of weak demand and oversupply, has seen some airlines change the way they procure their fuel in order to take advantage of the cheaper costs. Airlines, like Etihad Airways, have ended a hedging programme with lenders, whereby they buy fuel at a specific price range to protect against excessive changes in oil prices.

“We hedge on a three-year rolling programme, so the first year is typically about 80 percent, the second year is 50 percent and the third year is at 25 percent,” Etihad CEO James Hogan said last week. 

“We have collar targets and we’re comfortable where it is at the moment. But now we’ve stopped hedging because fuel has come down,” he added.

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