Fuel cost is affecting the price of plane tickets

Fuel cost is affecting the price of plane tickets

the airline industry, one of the last industries to join the process of economic reactivation, it was little on the path of growth without complications. Now, with the war between Ukraine and Russia the challenges in terms of costs of its operation return again.

(See: The new requirements for Colombians traveling to Mexico).

In an interview with Portfolio, Peter Cerdá, regional vice president for the Americas of Iata, He recounted the challenges that the sector is going through, in addition to the consequences and the possibility of an increase in ticket prices.

How have restrictions in some countries affected tourism?

The global situation is changing and also in our region, in a country like Chile that has 90% of people vaccinated, our position is that any passenger who is vaccinated should not have to go for a PCR on arrival or Before leaving their point of origin, this is what many countries like Colombia and Ecuador have done, where if the passenger is vaccinated, they can enter without any type of restriction, a person who is not vaccinated, obviously an antigen or PCR test, it is necessary.

In countries where regulations have been eliminated, such as Brazil, Uruguay and Paraguay, in which passengers who were vaccinated were required to undergo a PCR or antigen test, good results have been seen.

(See: These are the reasons why air passengers complain the most).

How has the sector recovered in the world?

The industry at a global level has recovered 50%, in the region it has recovered much better, we are at 75% of the figure we had in 2019.

In the case of Colombia, which is an exceptional case, very positive, for example, reservations in the month of March were 15% higher on international and domestic flights, this on the same date in 2019, which means that There is growth in the movement of passengers compared to the pre-pandemic period, which was the last month that we had stability in the market.

What factors have intervened in the growth of the industry?

That the measures are being removed is important. Without a doubt, what has intervened the most is the trend and the need to fly, people have a great demand, an enormous need to travel.

Colombia, for example, is a country where air transport plays a very important role in the country’s connectivity, both internally in national flights and internationally, there is a lot of movement of passengers and cargo, so once they eliminated mobility restrictions saw a positive progression, people welcomed this decision very well.

Peter Cerdá, regional vice president for the Americas at Iata.

private file

How did the sector survive in pandemic?

It is important to say that no government gave financial support or lent money to the air transport sector, unlike what happened in Europe and the United States where the countries contributed to the industry. There it gives us a bit of inequality with other regions, in the case of Mexico they told us from the beginning of the pandemic that they were not going to give financial contributions to the private sector, including transportation, but they told us that although they were not going to give us money, they were not going to impose restrictions on us or close borders either, which translates into: “I am not going to give you financial support, but I am going to let you operate normally”, and that was in the end better than a financial contribution, in Mexico we saw that the airline sector grew faster than where restrictions were implemented.

(See: Fuel and food, the ‘kings’ of imports).

Has fuel gone up, could the cost of tickets go up?

The fuel has a very high percentage level component compared to the cost of operation in the airline, it can vary between 20% to 40% depending. When there are changes in the price of fuel there is an impact on the airline, at a global level this issue is affecting not only tickets but also goods and services.
This rise in fuel prices will affect many sectors, which is why we ask some governments where there is a tax on gasoline, that the leaders help the industry to eliminate or reduce the rates and taxes on it.

At this rate, when could a full recovery of the sector be seen?

Our projections are that by mid-2023 the domestic recovery will take place at a global level, in 2025 it will be internationally.

However, there are factors unrelated to covid that can delay this recovery, for example the issue of fuel costs, the war in Ukraine also has an impact on the connection with other continents. We have a chain of factors that harm the recovery, at the moment the fuel will affect a lot. For this year the projections could be a little worse than what we had forecast. The message is: We are prepared to get back on track faster than other regions.

(See: Projects that seek to improve the supply of fuels).

How much has the fuel been going up?

As of December it was at US$68 per barrel and in recent times it was on average at US$140, more than double in less than three months. It must also be taken into account that in some countries the cost of the ticket increases because an amount of 14% above the price because they consider it an imported resource. However, we are doing well and we hope to close the year well in the region.

PAULA ANDREA GALEANO BALAGUERA
Journalist Portfolio

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