Airlines move to soften impact of rising fuel prices on fares
By Arjay L. Balinbin, Senior Reporter
LOW-COST airlines in the Philippines said they continue to seek ways to mitigate the impact of the rising fuel prices — exacerbated by the Russia-Ukraine conflict — on airfares.
“The recent surge in pump prices affecting the cost of jet fuel used in all of our aircraft is a concern for all airline companies,” Philippines AirAsia said in a statement to BusinessWorld on Wednesday.
“While we are carefully looking at the possibility of implementing fuel surcharge cost should the situation demands for it, we also want to manage its potential impact on our business,” it added.
At the same time, the airline noted that it is implementing sales and marketing strategies that seek to “circumvent the need to hike prices at the moment as we further study the implications of the year-to-date adjustments of oil prices.”
Oil prices have increased in recent months due to persistent supply issues and geopolitical tensions. Last week, Brent crude exceeded $100 a barrel for the first time since 2014 after Russia invaded Ukraine.
Meanwhile, Cebu Pacific said it is committed to its core mission of providing “affordable and accessible air travel to all.”
“Despite rising fuel prices, we have continuously offered promo fares such as our ongoing month-long P88 seat sale, and of course, our upcoming trademark piso sale in time for our 26th anniversary,” the budget carrier said in a statement to BusinessWorld.
Philippines AirAsia assured the public that despite the future of global oil supply, it will keep up with its goal of providing “high-quality yet attainable travel for guests ready to re-explore and reconnect with the world.”
Flag carrier Philippine Airlines was also asked to comment.
Meanwhile, the International Air Transport Association (IATA) said it expects travelers globally to reach 4 billion in 2024, exceeding pre-pandemic levels (103% of the 2019 total).
In the Asia-Pacific region, IATA said the slow removal of international travel restrictions and the likelihood of renewed domestic restrictions during the coronavirus outbreaks mean that traffic to, from, or within the region will only “reach 68% of 2019 levels in 2022, the weakest outcome of the main regions.”
It said the 2019 levels should be recovered in 2025 (109%) due to a slow recovery on international traffic in the region.
On the Russia-Ukraine conflict, the group said that air transport is resilient against shocks.
“This conflict is unlikely to impact the long-term growth of air transport. It is too early to estimate what the near-term consequences will be for aviation, but it is clear that there are downside risks, in particular in markets with exposure to the conflict,” it noted.
“The impact on airline costs as a result of fluctuations in energy prices or rerouting to avoid Russian airspace could have broader implications. Consumer confidence and economic activity are likely to be impacted even outside of Eastern Europe,” IATA added.
