Qantas is cushioned from price fluctuations until mid June, but fuel continues to soar. Photo / Josh Withers, Unsplash
Qantas is cushioned from price fluctuations until mid June, but fuel continues to soar. Photo / Josh Withers, Unsplash
Travellers are being told to book early to lock in flight prices before an anticipated rise in operating costs for airlines.
Just as petrol prices reached eye-watering highs at the pump last week, airlines are expecting to see a steep climb in jet fuel prices.
Air New Zealand has warnedthat pricing on international routes has reviewed and passengers will be picking up the tab on rising fuel and operating costs.
"Air New Zealand cannot absorb these increases and so airfares on international routes will increase accordingly," said a spokesperson for the airline. They put this fare inflation at roughly 5 per cent.
Across the Ditch Chief executive of Australia's Qantas airlines, Alan Joyce, has warned passengers to expect fare increases by as much as 7 per cent. Oil has seen a huge spike in price following Russia's invasion of Ukraine, after sanctions and general market jitters hit energy providers.
Although passenger planes don't have to line up at the bowsers to fill up, petrol and aviation fuel are both affected by rising oil costs.
While the hike is yet to feed into the price of an airline ticket, fuel price is a huge overhead for carriers. For most airlines, fuel is roughly 30 to 40 per cent of operating costs.
Qantas is cushioned from price fluctuations until mid June, but fuel continues to soar. Photo / Josh Withers, Unsplash
Director of Continental Travels Australia Ravi Kumar said he had already noticed a slow climb in ticket prices, of up to 5 per cent since the invasion of Ukraine last month.
"Generally we recommend consumers buy tickets early when there is an expected increase in prices," he told the Guardian, saying it already represents a rise of about $100 per ticket.
Jet fuel, like any oil-based commodity, can fluctuate rapidly in price. Something it did a lot during the pandemic travel restrictions.
Airlines will often buy fuel under contract and in bulk to hedge for changes in prices.
"Air New Zealand hedges a portion of its expected fuel consumption for the next 12 months, in line with the airline's treasury policy," said a spokesperson for the airline.
This should mitigate some price rise, however there will be a portion of this cost that will be passed on to passengers in the form of rising fares.
A report from Qantas said that it had secured 90 per cent of the fuel it needed until the end of June under contract, which Joyce said would "give us time to react to that higher fuel price".
Other airlines and small, regional carriers who cannot secure as much fuel may be hit at the pump.
If fuel prices continue to soar it could be catastrophic for budget airlines trying to climb out of the pandemic.
