British Airways chief says air fares will rise again if fuel costs stay high
Sean Doyle’s warning comes as jet fuel prices have doubled since Iran war began in February
The chief executive of British Airways has warned that fares will have to rise further if fuel prices stay high.
“There’s no getting away from if fuel goes up, fares have to go up,” Sean Doyle said in an interview on the sidelines of the International Air Transport Association’s annual meeting in Rio de Janeiro.
Jet fuel prices have doubled since the war in Iran began in February. Despite ceasefire talks, the Strait of Hormuz remains closed. The passage accounts for about 40 per cent of Europe’s jet fuel.
Airlines across the world have already increased prices to try to recoup higher costs. BA’s rival Virgin Atlantic brought in surcharges of £50 to economy tickets, £180 to premium and £360 to higher classes.
BA warned last month it would raise prices, especially in business class, to offset higher fuel costs. But Doyle said prices would rise further if fuel costs remained stubbornly high.
The airline will raise fares more on long-haul services than short-haul, a more competitive market segment.
“When people’s purpose to travel is business and doing deals . . . those price increases are kind of peripheral to the reason they’re travelling,” said Doyle.
“A brand like BA, which has got a lot of long-haul, a lot of corporate, a lot of premium, we’d expect maybe to have more pass-through of prices than maybe a carrier who’s solely competing for leisure short-haul.”
Despite recent climbs, airfares had failed to keep pace with inflation, he said, meaning many prices were the same today as in the 1990s.
“We had fares in 1995 of Barcelona for £60 one way. You can go on BA.com and probably get Barcelona for not too much more than that off peak,” said Doyle. “If you think about air fares as a percentage of the overall amount people spend on a holiday, it’s still a small percentage.”
The airline has used planes that no longer fly to the Gulf to add capacity on other routes such as those to Bengaluru. It is planning to resume services to the Gulf in the coming months.
BA plans to restart flights to the region in the coming months but will not relaunch Dubai until October, which marks the start of the airline’s “winter” season that runs until April.
“Dubai was always our biggest winter destination,” said Doyle. “It will come back . . . whether it takes a year or two.”
He also called on the UK to cut taxes on tourists to help boost the UK’s economy, warning that the country had fallen behind Japan and other nations that prioritise tourism.
“If you look at France and Spain, they’ve absolutely shot past us, and there’s a number of things in that, but a big part of it is cost,” he said.
If the country wants to hit its target of attracting 50mn tourists annually, up from about 40mn, “and want the economic benefit of that, I think we’re going to have to change the affordability proposition to tourists”.
The government has raised the air passenger duty, a charge paid by airlines that feed through to ticket prices.
“For a family of five coming into the country and travelling, it’s a huge penalty that they have to pay compared to what you pay in Europe,” said Doyle.