Further falls in air fares are likely to be seen in 2016 as fuel hedging contracts unwind and the decline in oil prices seen towards the end of last year feed through.
Key points:
– Worldwide airline share prices increased by 4.7% in January, recovering some of the decline seen in January;
– The latest airline financial results from Q4 2015 continue to point to a strong end to 2015, led by carriers in North America. By contrast, challenging economic conditions have taken a toll on Latin American carriers’ performance;
– Crude oil prices have rallied in recent weeks, driven by market expectations of a tightening in supply. However, the bigger picture is that oil prices are still some 30% lower than they were this time last year;
– After adjusting for distortions related to the rise in the US dollar over the past 18 months or so, global air fares fell by around 4-4.5% in 2015;
– Further falls in air fares are likely to be seen in 2016 as fuel hedging contracts unwind and the decline in oil prices seen towards the end of last year feed through;
– The global air passenger market made a strong start to 2016, with most regions posting record-high passenger load factors for the month of January. This bodes well for industry-wide financial performance in early 2016;
IATA Airlines Financial Monitor Feb 16
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
