There has been a stark warning for holidaymakers after industry group IATA decided to cut its profit forecast for the airline sector in 2012 – down by half a billion dollars from $3.5billion to $3billion on the back of increased fuel prices due to Gulf tensions.
Now there are fears that travellers could be hit by airlines forced to increase ticket prices to cover the additional expenses of added fuel costs.
Why are fuel prices rising?
Tony Tyler, from the International Air Transport Association, warned that if fuel prices reached $150 a barrel – up from existing levels of around $120 a barrel – some airlines could even face bankruptcy.
Even though the European debt crisis was seen as the main threat to the industry back in December, it is now thought that soaring fuel prices are a bigger risk – with supply fears prompted by concerns over stability in the Middle East. Currently there are tensions between the West and Iran following suspicions that Tehran may be indulging in a nuclear weapons drive. Iran has stated that its nuclear programme is only meant for peaceful purposes – but it is a threat close to the Strait of Hormuz, which is vital for the transit of oil.
Initially, the IATA had estimated industry earnings with a fuel price of $99 a barrel. However, prices have since closed in on $120 a barrel and this is expected to push fuel to 34 per cent of average operating costs – with the overall industry fuel bill to increase to $213billion. Political tensions in the Gulf region have also prompted fears that the industry could teeter on the brink of losses.
So what action can travellers take?
An obvious message to holidaymakers is to book their holidays as soon as possible to limit their exposure to potential price hikes. They should also endeavour to take out suitable travel insurance with ATOL protection to ensure they are not left out of pocket if a travel company or airline goes out of business. Remember that travel insurance can be bought independently through comparison websites – so don’t feel it is necessary to add it on to the price of a booking.
In addition, shop around with comparison websites to compare rates on flights, hotels and package holidays. Also be on the lookout for travel and holiday voucher codes. Currently there is several money saving offers available at Moneysaver.ie.
Among the latest deals are: Barcelona airport transfers from £8 through HolidayTaxis.com and Dalaman airport transfers from £7 through the same website – both HolidayTaxis.com voucher codes expire on March 31. You could also use the Barcelo.com voucher code to get 25 per cent off your stay in Brno Palace; or enjoy winter breaks from £59 a night with this Apex Hotels voucher code.