The aviation market throughout the world has faced turbulence resulting from increases in fuel prices recently. However, there is a new wave of cost jumps and airlines are pressured to make new decisions on strategy.
In 2018, the price of fuel increased by 15 percent, showing 60 percent higher costs compared to twelve months ago.
Airlines lack the flexibility of quickly adjusting fare prices because flight schedules and ticket prices are often prepared in advance. During the summer season of 2018, travelers will take advantage of up to 9 percent lower ticket prices in comparison to 2017’s summer period.
As a result, airline capacity has increased by 4.3 percent in 2018.
Carriers are already starting to respond to the upcoming trend of higher fuel prices. American Airlines, for example, has announced the cancellation of Chicago-Beijing flights, in addition to a number of South American services.
Competition is higher than ever and passengers are offered a wider range of alternatives, making it difficult for carriers to maintain competitive advantage.
Source: Aviation Voice