An aviation expert has said the massive drop in global oil price is yet to reflect on the activities of airline operators as air fares still remain relatively high.
Oil prices have plummeted by more than 50 percent over the last one year, however, the prices of commercial airline tickets had not dropped along with oil prices.
Sharon Mclean, an aviation expert said most airlines are now in fuel contracts that reflect the plummeting global oil prices, and wonders why the price is not falling especially in Africa.
In most routes in the United States and Europe airline prices has dropped.The US Bureau of Labour Statistics in a January report said air fares by foreign travellers on US airlines fell 15.0 per cent in 2015, the largest calendar-year drop since the index was first published in 1987.
The decline in ticket prices was steepest for air travel to Latin American and Caribbean (down 17.8 per cent), but there were also big drops in fares to Asia (down 14.6 per cent) and Europe (down 11.7 per cent).
The International Air Transport Associated (IATA) late last year said that ticket prices have not been cut because airlines are still in contracts for fuel that pre-date the previous months’ oil prices fall. IATA represents 240 airlines or 84 percent of total air traffic.
Aviation Experts say with oil and jet fuel costs down two-thirds since last year, airlines can expect to reduce their overheads by about 20 per cent leading to cheaper air fares across the globe.
Experts say fuel makes up about a third of an airline’s costs. With oil and jet fuel costs down two-thirds since last year, airlines can expect to reduce their overhead by about 20 per cent.
Some airlines said they are using the windfall in fuel costs to reduce debt and to make needed reinvestment in their infrastructure.
