Demand for holidays at risk as oil price skyrockets

The price of holidays will increase after the oil price hit $135 a barrel last week.

Air fares will rise in line with fuel and it is only a matter of time before that affects demand, say airline bosses.

Monarch Airlines managing director Tim Jeans said: “The doubling in price [in a year] is a shock to the industry. Things cannot carry on as before.”

“Business does not die because you put £20 on a trip. But there is evidence of people flying less if you look at airport statistics.

“Fares will rise…and capacity will shrink this winter.”

American Airlines became the first traditional carrier to charge to check-in bags last week on its US services. Chief executive Gerard Arpey said: “Our industry cannot afford to sit hoping for conditions to improve.”

Cathay Pacific Airways added £45 to fares from the UK and Qantas announced a 5% cut in capacity after increasing fares.

EasyJet admitted it will rein in expansion by retiring older aircraft early.

However, multiple agents attending Travel Weekly’s Midland Travel Trade Ball in Birmingham this week put a positive spin on the fallout from the oil crisis.

They said people who flew independently in the belief they had found cheap air fares online would find themselves without the built-in insurance packages multiples could offer them if their carrier went bust.

“I’ve had people in such positions calling me to for help,” said one. “I’ve had to tell them I can only give them an enquiries number. They all say they will book with an agent in future.”

An ABTA spokeswoman said: “Price rises do not matter so long as people are prepared to spend on holidays and so far they have been. Whether they will have so many holidays, we will have to see.”

She added: “If airlines are savvy, they will cut capacity.”

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