The end of cheap flights? How the war in Ukraine is driving up airfares

Russia’s invasion of Ukraine has caused oil prices to rise, which could have a ripple effect on airfare prices and the cost of your next vacation.

This morning, Brent crude, which directly affects the price of aviation fuel, hit $139.13 a barrel, the highest level since July 2008, and marks a $40 increase since the start of the Russian invasion on February 24.

The result is that flight prices will inevitably rise. John Gradek, professor of aviation management at McGill University, Quebec, told the Telegraph: “As the price of crude oil rises in these tumultuous times, it can be expected that the costs of airline operations and therefore air fares are increasing,” he said.

The good news for vacationers, however, is that while the cost of overseas travel may increase, the overall price of your getaway is unlikely to become exorbitant.

Supply and demand will keep airfares low

Some airlines such as Ryanair have already secured their fuel supplies for 2022 in a process known as “hedging”, meaning the cost of flying with them should remain relatively affordable. A quick Skyscanner look at their tickets for the rest of March shows a flight from Liverpool to Vienna for £6 and a flight to Faro for £7.

A number of airlines have not entered into hedging arrangements due to the costs and risks involved in this process, meaning their operating costs are likely to increase as the price of crude oil increases. Sonia Davies, CEO of tour operator Scott Dunn, said: “We are already seeing increases coming from airlines, both as fuel prices rise, but also in the longer sectors (from Middle Eastern carriers) .”

However, due to the laws of supply and demand, an airline is unlikely to allow its ticket prices to skyrocket while the competition keeps fares affordable.

Rob Burgess, Loyalty Website Editor headforpoints.com, told the Telegraph that pre-existing flight bookings are safe: “Historically, when surcharges have increased, British Airways and Virgin Atlantic have not gone back to booked customers and asked for extra money. While probably legal under their terms of carriage, it’s inconvenient and very bad for public relations. »

“And, of course, from the point of view of a cash customer who has not yet booked, nothing will change. The laws of supply and demand don’t change just because fuel prices go up. If BA can only fill a plane to New York by charging £300, then £300 is what it will charge, and it has no choice but to suck up the cost of fuel.

“BA’s ability to increase ticket prices is very slim and, of course, customers are facing rising energy bills for the same reasons, which means they have even less money to spend on discretionary flights.

Business travelers could be the most affected

Airline industry consultant Robert Mann points out that price increases will be unique to each carrier’s cost structure. However, it will not be dramatic. “Every 10% increase in jet fuel prices represents an increase of approximately 3% in total cost, and airlines are unable to increase fares or fuel surcharges for passengers already booked.”

Mann also predicts that business-use tariffs could be hit first. “Airlines are accepting fare and fee increases where they can, and where supply and demand allow. Airlines are likely to increase reimbursable fares and fees by up to 5% for commercial purposes, while being less able to raise fares and fees for cost-conscious leisure customers.

Frequent flyers are also not immune to flight price hikes. Rob Burgess of headforpoints.com said: “From a frequent flyer/loyalty/airline miles perspective, it’s perhaps worth noting that using airline miles is not a way to escape increase in surcharges. The ‘taxes and fees’ item added during your booking will simply increase.

The price of your vacation package could increase

Tour operators are legally permitted to add extras to the cost of your holiday if they can cite circumstances beyond their control, such as rising fuel prices.

Sonia Davies, CEO of Scott Dunn, told The Telegraph: “If there are challenges with supply chains due to the conflict, then there is the possibility that costs will rise on the ground in terms of food, etc.”

Customers are however protected. Under public holiday regulations, companies are allowed to pass on increases of up to 8% without allowing you to cancel without penalty. So a £1,000 all-inclusive package for Greece you booked in January could become £1,080. Your tour operator might try to increase the cost of your travel package by more than 8%, but doing so will allow you to cancel without any penalty.

If you haven’t booked your vacation yet, you may find that prices fluctuate in the weeks and months to come. A Tui spokesperson told the Telegraph: “We carefully monitor fuel price increases and use a dynamic pricing model, which means prices can go up or down. Many variables influence this, including when people want to travel, where they want to travel from and how they choose to book.

If your tour operator tries to impose a surcharge on your holiday, you have the right to ask for proof of why the price has increased.

The result ? Book now to get the cheapest deals

The safest bet to avoid being stung by flight price increases is to book now, not least because demand for post-pandemic holidays is likely to increase as more countries ease their terms. of entry and that we are approaching the summer season.

An ABTA spokesperson said: ‘Customers looking for value and availability should book now rather than leave it late as prices are much more likely to rise in due to growing demand for overseas vacations as travel restrictions continue to lift in many destinations around the world. ”

Noel Josephides, director of industry issues at AITO and president of Sunvil, agrees that the best way to guarantee an affordable vacation this summer is to book now.

“There will be huge demands domestically from our traditional summer holiday destinations – for example, Greek, Spanish and Portuguese holidaymakers in their own country [taking breaks there].

“There will also be strong demand from all countries in Northern and Eastern Europe [European] countries: this will be in addition to limited availability throughout Mediterranean Europe.

To guarantee the cheapest flight fares, it’s worth setting up a price alert with comparison sites like Skyscanner or Google Flights.

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