With oil prices on the rise, American Airlines CEO says that airline ticket prices could take off.

A top aviation boss says the price of an airline ticket could be going up up and away as he blames increasing oil prices

Oil prices are up by up to 50 per cent over this time two years ago.

American Airlines CEO Doug Parker told reporters: ‘If it becomes clear this is the new normal you would see over time less capacity and growth in the industry and therefore higher prices.’ 

Parker spoke with reporters at the annual meeting of the International Air Transport Association (IATA), an industry group that represents about 280 airlines.

A report Monday from IATA estimated profits across the industry will be down this year, predicting total profits of $33.8 billion, down from a previous forecast of $38.4 billion in December. 

Airlines face pressure due to rising fuel prices which are expected to rise about 25 per cent this year, IATA said. 

American Airlines CEO Doug Parker spoke to reporters at an Industry meeting on Sunday 

American Airlines CEO says that so far they've not raised fares despite increased oil costs, but that could change.

American Airlines CEO says that so far they’ve not raised fares despite increased oil costs, but that could change.

According to CNN, IATA expects the average price of a barrel of Brent oil, which is the global benchmark, to be $70 this year – up 28 per cent from 2017. 

On Monday, in Asia, Brent was trading above $76 a barrel. 

According to the report, rising oil prices aren’t the only challenge the aviation industry faces. 

There is the issue of protectionism, with borders closing, the effect that Brexit will have on travel is up in the air, and then there is the fallout form the US pulling out of the Iran nuclear deal.  But overall, according to IATA, the industry is doing well. 

The American Airlines CEO said that right now, his airline is absorbing the costs and, ‘we’re still profitable. But we’re making less and the reality is when your second largest expense goes up by 40% generally as the cost of production goes up the cost to consumers goes up over time.’

Meanwhile,  the airlines say they are working to keep prices down, but make no promises. 

Oil prices are up 50% from this time two years ago, and that could change the price of airline tickets

Oil prices are up 50% from this time two years ago, and that could change the price of airline tickets

 

 



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