The global airline industry can be expected to save $7 billion next year due to a 20% drop in jet fuel prices, according to a new report.
The OAG trends report has calculated the potential savings from a 5% reduction in the fuel price with carriers such as American Airlines and Emirates likely to make large gains.
Lower fuel prices will provide low cost carriers with an even greater cost advantage.
But the “shadow on the horizon” is that if these lower oil prices reflect weaker demand in the global economy, air travel demand is set to weaken.
The study also identifies the ‘Millennials’ generation as having a big influence on the aviation industry.
But it warns that while travel from China is likely to double every 12 years, the outlook for west African countries looks bleak due to the outbreak of Ebola, with January 2015 seat capacity to and from Sierra Leone down 75%, Liberia down 81% and Guinea down 39% against the same month this year.
OAG executive vice president John Grant said: “While it is being reported that lower fuel prices are good news for airlines and their passengers, there is the possibility that these low prices reflect weaker demand in the global economy, in which case we could be at the top of the commercial aviation business cycle.
“We are entering 2015 on a positive note in terms of these fuel prices, but if economic activity should slow in the second part of the year, the portents would be outweighed by the short term optimism.
“If this is the case, 2015 is going to be a challenging year for aviation and the longer term implications on wider industries will soon be realised.”
Grant added: “The Millennials generation, who will have progressed from education into the workplace, are to have a much greater influence on the aviation industry than previously realised.
“If we assume that people want to fly as much as they want to have mobile phone technology at their fingertips, we can see mobile phone use as a forward indicator of the future demand for air travel.
“We know that China and India will likely contribute 28% of the additional 4 billion air passengers between now and 2034. Today, 29% of all mobile phone users live in China and India.
“Indonesia will account for 4.6% of the growth in air traffic to 2014; today, Indonesia accounts for 4.1% of global mobiles. Coincidence?
“Maybe, but we should expect the volume of air travel to more closely reflect the underlying population size in a market.”