Emirates Airline to hike ticket prices as fuel costs climb

Unrest in major oil producer Libya sends Brent crude prices to a two and a half year high
Emirates Airline to hike ticket prices as fuel costs climb
Emirates has increased fares in the wake of rising fuel costs
By Karen Leigh
Tue 01 Mar 2011 03:16 PM

Emirates, the Arab world’s biggest airline, will raise fares
from Tuesday as oil market speculation sends fuel costs soaring, the Dubai flag
carrier said in a statement.

An Emirates spokesperson told Arabian Business that the
airline had raised ticket prices, but the increase would “differ by markets and
routes.”

“Like every commercially-oriented business, Emirates
regularly reviews its fares to reflect market dynamics including demand and
rising fuel prices.” she said. “We have an active fuel risk management
programme but with such market volatility it is impossible to fully absorb the
impact of soaring oil prices."

Other airlines in the region, including Royal Jordanian,
have not announced changes in fares.

RJ “already adds a fuel surcharge to the fares to some of
its sectors, according to the fuel prices in the international market. However,
at the time being no changes in the fare prices are applied,” the airline’s
media director, Basel Kilani, told Arabian Business.

Regional airlines have been severely affected by political
turbulence in countries like Egypt, Yemen and Libya. Dubai-based Emirates cut its flight frequency from
13 flights weekly to Cairo to seven weekly, in the wake of uprisings in the
Arab country.

Carriers including
Royal Jordanian, Emirates and British Airways have halted flights to Libya.

The turmoil in
Libya, which pumps nearly two percent of world oil output, sent Brent crude
prices above $108 a barrel to a two and a half year high on Monday.

"Assuming
the situation continues, the oil prices are expected to touch $115 to $120 per
barrel within the next two weeks, which would result in losses for global
airlines for the current year," said John Siddharth, an industry analyst
for the South Asia and Middle East at Frost & Sullivan.

The International Air Transport Association on Wednesday
said the Middle East had seen an 8.2 percent rise in passenger traffic in
January, compared to the previous month, but warned carriers would be “very
challenged” by rising oil prices.

 “The region’s
instability has sent oil prices skyrocketing,” said Giovanni Bisignani, IATA’s
Director General and CEO. “Our current forecast is based on an average annual
oil price of $84 per barrel [Brent]. Today the price is over $100. For each
dollar it increases, the industry is challenged to recover $1.6bn in additional
costs.

"With $598bn in revenues, $9.1bn in profits and a profit margin of just
1.5 percent, even with good news on traffic 2011 is starting out as a very
challenging year for airlines," he said.

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