Dubai: UAE’s airlines have so far not hiked their ticket rates in response to the global surge in crude oil prices, which have touched $130 a barrel and some worst-case scenarios suggesting that it could even cross $200 a barrel.
Travel agents said that fares for April will only see a marginal increase. With fewer travel restrictions in place, bookings on sectors such as UAE-India and UAE-Pakistan could double closer to the Eid break in early May.
“ Fares have been surprisingly muted and it looks like airlines have so far not taken any action in response to the oil price rise,” said Suraj Ramesh from Al Badie Travel Agency.
A flight from Dubai to New Delhi is seen costing around Dh500-Dh900 for a mid-April flight. On Dubai-Mumbai route, some airlines are quoting over Dh800 for a flight next month. Dubai-Karachi tickets, which cost around Dh200 right now, will cross Dh500 in April. Meanwhile, flights to Lahore will be around Dh470 by next month.
Indian airlines have not increased their international airfares, and that could be due to competitive reasons.
Hold the line on rates
“The major threat to the airline industry’s recovery appears to have switched from the COVID-19 worries to rising oil prices, exacerbated by the Ukraine crisis,” said Linus Benjamin Bauer, Managing Director at Bauer Aviation Advisory.
Airfares will likely continue to rise, but perhaps with some restraint by the UAE carriers.
Low-cost carrier Air Arabia has been hedging about 40 per cent of its fuel needs and that has helped the airline keep ticket prices competitive. “We have been hedging about for quite a number of years – occasionally, it bites you, but, sometimes it has worked for us,” said Adel Al Ali, CEO of Air Arabia during an industry event last week.
Airlines flying between Asia and Europe have to take longer routes with the closing of the Ukrainian airspace. Several EU and US-based airlines have also been avoiding Russian airspace.
Emirates airline, which flies daily services to UK, has so far not levied a separate fuel surcharge as part of its ticket charges.
"Since the Europe-Asia direct flights have been heavily impacted, it could benefit UAE carriers to further tap into that market," said Bauer. "However, due to Asia's zero-COVID-19 approach, Europe-Asia capacity has not been really driving the recovery to date."
A spokesperson for Regal Tours said that Europe was the only sector where airlines were charging Dh100-Dh250 additionally per ticket.
Airlines are also facing increasing airport charges. “The oil price rise came at a really bad time for the aviation industry,” said Kamil Al Awadhi, IATA’s Regional Vice-President during the Arab Aviation Summit last week. “We are also worried about airports increasing charges – a lot of the handling agents are also hiking charges.
“In general, it's another wave of additional expenses for airline CEOs to worry about. While airlines have very little resources left, they're resilient. But this resilience has a limit.”
Indian airlines have increased domestic airfares by as much as 50 per cent on some routes. A one-way Delhi - Mumbai ticket was around Dh125 last week when booked a month in advance. That number is now hovering at around Dh200.