Airline tickets could become even more expensive, aviation execs warn

'Political will' needed to help the aviation industry achieve true net zero by 2050: IATA

Air tickets could change into costlier — due to the shortage of refining capability and the monetary state of airways, mentioned William Walsh, the director-general of the Worldwide Air Transport Affiliation (IATA).

The decline in refining capability in the course of the pandemic, and better jet gas costs brought on by the rise in demand for gas are “of concern” to the airline business, Walsh advised CNBC’s Hadley Gamble on Wednesday.

U.S. refining capability dropped by 5.4% in 2022 because it peaked in 2019 — the bottom in eight years. The dip got here within the wake of refinery closures and conversions to provide extra renewable fuels.

Walsh added that whereas customers are paying increased ticket costs, airways aren’t essentially making a revenue.

“And given the monetary state of many airways … It isn’t that airways are being profitable, [they] are simply passing on a value that they cannot take in themselves, and that they cannot keep away from,” he mentioned.

IATA: There’s not a lot airlines can do about high fuel prices

Russia-Ukraine conflict

However one other issue may contribute to even increased ticket costs — Russia’s announcement of a army mobilization, mentioned Qatar Airways CEO Akbar Al Baker.

Russian President Vladimir Putin on Wednesday introduced a partial army mobilization in Russia, putting the nation’s individuals and financial system on a wartime footing as Moscow’s invasion of Ukraine continues.

Al Baker advised CNBC that China’s Covid insurance policies are the “smallest of [his] worries,” and that the airways’ biggest concern is the escalation of the Russia-Ukraine conflict.

“For me, the most important fear is the battle spreading, which [will then] gas inflation, placing extra strain on the availability chain,” he added. “The web end result might be much less passengers in my aeroplane.”

Qatar Airways CEO: The biggest challenge to aviation is political upheaval

“It additionally worries me … the [instability] of the oil value, which I do not wish to cross to the passengers, which can then discourage them from travelling.”

Oil costs jumped by greater than 2% after Putin’s announcement, following considerations of an escalation of the conflict in Ukraine and squeezing oil and fuel provides.

Nonetheless, Al Baker maintained that Qatar will proceed flying to Russia so long as it’s operationally protected to take action.

“We’ll proceed to fly to Russia, we’ll proceed to serve the individuals … We aren’t a political establishment. We’re an business that serves the frequent individuals.”

Hopes for inexpensive sustainable gas

Al Baker known as for extra investments in different gas, and that Qatar Airways is “able to put money into sustainable aviation gas” on the situation that it’s “fairly priced.”

“I’ve no subject [paying] a bit extra, however they can not pay 4 or 5 instances the worth of a traditional F-gas.” F-gas, also referred to as fluorinated gases are man-made gases utilized in numerous industrial makes use of.

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“If we’re pushed to try this, you as a passenger are going to pay for it,” he mentioned.

Walsh echoed his hopes of seeing extra funding within the manufacturing of sustainable aviation gas fairly than conventional refineries, citing environmental considerations.

Final 12 months, IATA set a purpose for the worldwide air transport business to realize net-zero carbon emissions by 2050.

“Sustainable aviation fuels do symbolize the most suitable choice that the business has to realize our goal of internet zero by 2050.”

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