Air fares are set to rise later this year due to a combination of spiralling fuel prices and higher airport charges.
The strengthening of the dollar against the pound is forcing fuel prices up and airports are increasing their charges to make up for the loss of duty-free sales within the European Union.
Charter seat-only operators have already hiked prices for winter 2000/2001, although in most cases the increases are no more than 2%-3% over last winter. Avro distribution director John Fitz-Gerald said: “I don’t think such a small increase will affect our business too much but obviously prices are fluid and a bigger increase may cause a bit of a turn off.”
Cosmos Flights commercial director Stuart Jackson said increasing airport charges were likely to have a greater impact on charter flights than rising fuel costs.
“Airports are beginning to pass the cost of the abolition of duty-free sales on to the customer and this is much more of an issue than fuel prices,” said Jackson.
Passengers flying from small regional airports are likely to be hit the hardest as these have lost a greater proportion of their income than the bigger airports that have more long-haul traffic.
“Regional flight supplements will start to fluctuate to reflect the increase in charges which will vary slightly from airport to airport, depending on their mix of European Commission and non-EC business,” added Jackson.
Scheduled airlines say market forces will dictate how much they will raise their fares but many of the major airlines are planning to push up ticket prices from next winter if fuel prices remain high.
Significant increases are not expected before then as most carriers have already purchased their fuel for this summer at last year’s prices.
Travel 2 air product director David Gibbs said: “It seems certain that the cost of fuel will rise this year and this will undoubtedly have an impact on air fares to all destinations.
“However, fuel is by no means the only factor and airlines can only increase fares to levels that individual markets will support.”
He said that fares on Australasian and transatlantic routes were likely to remain competitive due to a significant amount of excess capacity.
Low-cost carriers will be worst affected by rising fuel prices as they generally pay more per barrel than their bigger rivals but EasyJet and Ryanair insisted they would not pass the burden on to the customer.
An EasyJet spokesman said: “We have managed not to increase our fares for the four years we have been in business. Ultimately prices will go up with inflation, but we have no plans to increase fares at the moment.”
Ryanair said it had already paid for its fuel up to December 2000 so it would not be forced to increase fares for at least 12 months.
A spokeswoman added: “Our fares will always be lower than other carriers.”
However, industry insiders believe all low-cost carriers will have no option but to increase fares eventually.
One industry insider said: “Low-cost carriers will keep their lead-in fares low but they will have to charge more for the rest of their seats if they want to carry on making money.”