13-Jun-2011 1:25 PM

5% fare increase only way for airlines to offset rising fuel costs: IATA

IATA chief economist Brian Pearce stated a 5% increase in fares is the only way for airlines to offset rising fuel prices, which have increased by more than 50% over the past 12 months (Gulf News, 13-Jun-2011). Separately, Emirates President Tim Clark stated the carrier, which has increased fares by 15% in 2011, would face difficulties if fuel prices increase to USD150-160/barrel.  "We may have to tend to our costs if oil prices go up to $150-$160 per barrel. And as long as the fuel stays at $100 per barrel plus, the whole industry is going to face real problems," Mr Clark said.

IATA: "With no sign of a significant decline in oil prices that are staying stubbornly above $100 a barrel, airlines are fighting to stay profitable and have pushed up ticket prices in order to recoup costs. They have had no choice but to hike fares. We are looking at a fare increase of at least five per cent. We have seen a five per cent increase in unit costs because of the rise in jet kerosene and that is with the [airline] industry having hedged 50 per cent of this year's fuel bills. So we are going to see that five per cent reflected in airfares," Brian Pearce, chief economist. Source: Gulf News, 13-Jun-2011.

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