Airlines are beginning to roll out fuel surcharges as the rising cost of oil and jet fuel increases operating costs. Travellers are expected to feel the impact as peak summer travel season approaches.
The increased fuel prices are linked partly with ongoing conflict in the Middle East putting pressure on the travel industry with airlines trying to offset higher operating costs.
In a statement to Humber Et Cetera, Arma Durakovic, head of public relations and communications at Flight Centre, said, “Rising oil and jet fuel prices are starting to impact the global travel industry and Canadian’s are beginning to see that when they book.”
Experts say that the cost of fuel makes up a significant portion of the operating costs of airlines.
“It’s expensive to absorb the cost when the fuel represents about 30 per cent of your total cost of flying an airplane from point A to point B,” said John Gradek, an expert in aviation management at McGill University in Montreal. “You’re impacting significantly your profitability.”
“The price of gas at the pump and at the airport have increased significantly,” said Gradek. “It really doesn’t matter what we do in Canada in terms of our own production, our own refining capability – what you’re seeing at the pump and at the airport is a function of world pricing.”
Durakovic said that airlines are adjusting fares, adding surcharges and in some cases reducing flight capacity.
For travellers this could mean fewer last minute deals and less availability especially for international routes.
These changes coming into effect as the demands remains high heading into peak summer travel season, making more pressure on the prices.
“With more people competing to book for fewer seats, prices can move up quickly,” said Durakovic.
Travellers are already beginning to adjust their spending behaviours in response to the rising costs.
“In some cases the fares have gone up at least twenty to thirty per cent since mid-February,” said Gradek.
Durakovic also said that more Canadians are booking trips earlier and planning things more in advance in order to secure better prices and availability.
“In this kind of environment, waiting can mean fewer choices and higher prices; while booking earlier gives travellers more control,” she said.
Both also saying that being flexible can also help travellers deal with higher costs and being open to different dates and destinations will help people find the best possible value.
Gradek highlighted that these surcharges may be redistributed once oil prices are back to normal and travellers may see little to no change in the prices they’re paying.
“Those surcharges never disappear – once they’re in, they’re in and more often than not get translated into the actual fares themselves,” he said. “They won’t disappear, you won’t see a reduction in your travel costs, you’ll see it being redistributed more towards fares and not so much on these surcharges.”
We also may be facing a significant crisis due to a lack of aviation fuel.
“This is probably a crisis – we really haven’t seen the full impact of the lack of aviation fuel causing airlines to cancel flights and reduce flights,” said Gradek.
“Once we hit aviation fuel shortages you’ll see airplanes park twenty, thirty, forty airplanes parked. You’ll see layoffs, you’ll see carriers potentially going bankrupt as a result of that shortage of fuel.”
