EasyJet boss - fares are going to increase

9 June 2011

Bitterwallet - easyJet

Budget airlines are set to become less easy on the pocket as easyJet's boss has warned that fares are going to have to rise thanks to a rise in fuel prices.

Carolyn McCall spoke on the back of the very interesting sounding Organisation of the Petroleum Exporting Countries (or, Opec, because we really can't be arsed to continually type the whole thing out again) left production levels unchanged, which isn't going to do much in curbing oil prices.

McCall said: "We are planning all our budgeting around the fact that oil will remain high, at above $100 a barrel. Fares will rise inevitably because you have to pass on fuel some way or another, all other airlines will have to do it."

Everyone has been trying to encourage Opec to raise production to between 1 and 1.4 million barrels of oil per day, with the thinking being that, if they get their arses in gear, crude oil may dip in price. It was thought that they'd play along, but surprisingly, the organisation decided to leave things as they were, which isn't going to go down well with airlines as they pass the cost on to the public.

And airlines are feeling it as Aer Lingus, Lufthansa, Alitalia and BA are just some of the names that have announced losses in recent months. Combined, the world's airline companies are reporting losses £11bn from previous years profit. With rising jet fuel costs and a rise in passenger taxes, this is adding around £21m to overheads.

Sky report that over the six months to the end of March, easyJet have seen a pre-tax loss of £153m. That's nearly double last year's figure.

Meanwhile, Opec are still weighing up whether to increase output, which could be make-or-break for many budget airlines.

TOPICS:   Travel   High Street News

5 comments

  • Matt H.
    The more they increase production the quicker we reduce crude stocks... so just quickening the time before there is none at all! Don't airlines 'hedge' their fuel? So they are paying prices now that were set 12-18 months ago?
  • Ben
    OPEC? Seriously? You havn't heard of of OPEC before? FFS
  • callum
    They generally do - but I guess hedging while the prices are high isn't a particularly great idea.
  • Dick
    Hasn't Alitalia made losses every quarter for the last 20 years?
  • Andrew
    A £21m rise in costs doesn't account for much of the £11bn in losses!?!?

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