The full effects of the high price of oil have yet to kick in despite a recent fall from $147 a barrel to under $130, travel bosses said at a Barclays panel discussion on the future of air travel.
That is because most airlines agree the price for a proportion of their fuel in advance – a practice known as hedging. So British Airways has hedged most of its current fuel at $84 a barrel.
This has helped keep fares down. Yet airline bosses are surprised that the price of fuel has not had a greater impact on demand.
Monarch Airlines chief executive Peter Brown said: “When oil was $50 a barrel I thought, if it goes to $100, you may as well switch the lights out. But everyone continued operating and, in general, people continue to travel.
“We are seeing capacity come out and there will probably be some airline casualties.
“If oil went to $200 a barrel more capacity would come out. There would be fewer people travelling, less capacity and higher prices.”
The big problem is uncertainty, he said: “No one knows what to do.”
But Brown added: “We have had economic slowdowns before and, once the situation has passed, it means better times for the companies left.”
