Airlines are preparing to pass through rising fuel costs to customers.Credit:Brendon Thorne
“Unfortunately if they[oil prices] stay at these levels,airfares are going to have to go up,” Mr Joyce said at anAustralian Financial Review event. “Seven per cent is not massive,but it will have an impact,I think,on some levels of travel.”
The warning came as the Australian Competition and Consumer Commission (ACCC) noted a significant decline in domestic airfares over summer,while carriers tried to stimulate demand amid the Omicron COVID-19 wave and as Rex Airlines challenged Qantas,Jetstar and Virgin Australia on inter-city routes.
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But fares were trending up in February,with the cheapest tickets on flights between Sydney,Melbourne,the Gold Coast and Brisbane jumping by $10 to $20.
“If these[oil] prices stay up at stratospheric levels … then it will hit consumers badly,” ACCC chairman Rod Sims said.
Fuel generally accounts for about a quarter of an airlines’ costs. Airline economist Tony Webber said airlines would increase fares and return capacity to the skies more slowly than they would have otherwise.
That was particularly true for international routes,he said,which burn more fuel and have lower demand post-pandemic.