Declining Fuel Prices Are Not Necessarily Translating to Cost Savings Across The World

On a global basis we are seeing industry associations painting a positive light on the business and how the declining cost of fuel is helping the industry boost profitability. However, a panel session on the ‘State of the Industry’ at the World Routes Strategy Summit in Durban, South Africa, highlighted that this is not a generalisation and there is not a level playing field across the globe.

Hemant Mistry, director, airports and fuel, IATA sparked the debate when he raised the issue that while airlines are seeing the benefits of a market-based pricing regime in many countries, across Africa it is a very different scenario. “In Africa, many states don’t have transparent market-based pricing so the drop in crude does not yield a drop in prices of jet fuel for airlines,” he said.

The view was supported by Tewolde GebreMariam, chief executive officer, Ethiopian Airlines, one of the few profitable airlines across Africa. He claimed that such charges continue to hold the African aviation industry back from growing and continues to make it artificially expensive to fly within the Continent. “Who is paying the final price for this? It is the airlines,” he said, “and this additional cost is being based directly on to the consumer.”

You can view more on this subject from this clip from the World Routes Strategy Summit panel discussion, below: