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June 4, 2018

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US airline warns of higher ticket prices

Source: Agencies | 00:01 UTC+8 June 4, 2018 | Print Edition

AMERICAN Airlines warned that airline passengers may eventually face higher ticket prices if oil prices remain high, prompting carriers to remove seats from the market.

Oil prices have risen around 50 percent from the levels seen last year and that is putting pressure on airline profits.

“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, but I don’t think that’s going to happen in the near term,” CEO Doug Parker said on the sidelines of the annual IATA meeting of airline executives in Sydney.

IATA, which represents about 280 airlines comprising 83 percent of global air traffic, has said that it will tomorrow revise down its forecast for industry profitability this year amid higher oil, infrastructure and labor costs.

The US last month agreed a deal with the United Arab Emirates and in January with Qatar to resolve claims from the three largest US carriers that Gulf airlines had received unfair government subsidies.

Parker said he was pleased with the result of the talks but needed to see more from the Gulf carriers before American Airlines could consider partnerships with them.

“We haven’t had enough time to make sure that those resolutions have the effect that we hope for, so we shall see,” he said.

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