Travellers to Pay Lower Airfare Next Year

Though the price of crude oil has dropped by 40 percent since June, travellers are still paying high ticket charges. The International Air Transport Association (IATA) attributes this situation to the contracts which many airlines are still stuck with, which ‘predate the past months’ price slump’.

The Geneva-based association is now forecasting lower airline fares next year owing to the significant drop in fuel prices and faster global growth. Representing 240 airlines, which make up 84% of the world’s total air traffic, the body predicts that global airline industry will make a combined profit of USD $25 billion in 2015, up from USD $19.9 billion this year and USD $10.6 billion in 2013.
“The industry outlook is improving. The global economy continues to recover and the fall in oil prices should strengthen the upturn next year,” said IATA Director General, Tony Tyler.
Fuel prices are expected to average around USD $85 per barrel – 20% lower than 2013.  This drop will consequently pass the benefits on to the consumers as the airlines are expected to trim the average ticket price by at least 5% amid the rising demand for flying.
“We see falling oil prices to give a great boost both to the industry and consumers,” IATA Chief Economist Brian Pearce said.
Down from an expected USD $204 billion this year, IATA expects airlines to spend USD $192 billion on fuel next year though Director General Tony Tyler says that the airlines were unlikely to be realising the benefits yet.
“Airlines fuel prices are based on previous months’ oil price so they're probably not seeing results from the falling oil price just yet. It’s also varied because some are thoroughly hedged and some won't be,” he told BBC.
Nevertheless, African carriers have emerged the weakest with a combined net profit projected at USD $0.2 billion in 2015. In November this year, Kenya Airways posted a record half-year loss of KES 10 billion.