How high can the cost of fuel rise without hitting demand for travel?
The industry has proved largely immune to the growing pressures so far, while other retail sectors struggle. Let’s hope that continues.
But we are in uncharted waters. Few believed oil would break through the $100 a barrel mark, let alone $125. This week it was above $130.
The last time oil prices soared to this extent was in the early 1970s when the cost of a barrel of oil quadrupled in a year.
The impact of soaring oil prices is most keenly felt in the aviation sector, with fuel accounting for 50% of the operating costs of the budget airlines.
The costs have to be passed on to consumers. Low headline prices remain but average fares can only rise and the starting prices will no longer be so cheap. Many in the trade have long called for such a correction.
Increased prices and reduced capacity give agents a chance to focus on what they do best – offering quality, good value and customer service.
Undoubtedly there will be more airline failures. We must hope this does not lead to a general sense that air travel is a risky purchase.
But the major companies and airlines are financially strong and in robust health. The package holiday industry has a consumer protection system that puts some sections of the industry to shame.
However, as the cost pressures play out there will be winners as well as losers.
Well done to our winners
Congratulations to all the winners of the Travel Weekly Agent Excellence Awards at the Midland Travel Trade Ball, which was held at the Birmingham Hilton Metropole hotel on Tuesday night.
More than 300 travel professionals attended the event to hail the very best travel agents in the Midlands region.
