Higher Jet Fuel Prices May Become New Norm For Airlines - AAPA
KUALA LUMPUR, Nov 13 (Bernama) -- Higher jet fuel prices could become the new norm for the aviation industry as airlines grapple with a significantly higher operating cost environment, potentially leading to fare increases and fuel surcharges, said the Association of Asia Pacific Airlines (AAPA).
Its director general, Wong Hong, said the industry was facing a vastly different cost environment compared with a year ago, when jet fuel prices stood at around US$80 per barrel, against the current level of US$180 per barrel.
He said while consumers were increasingly aware of market conditions and the factors influencing airfares, airlines were striving to balance higher operating costs with the need to keep air travel affordable.
“We are operating in an entirely different environment, with a completely different cost structure, and our concern is that these high prices look set to persist.
“You hear similar sentiments from chief executive officers today, suggesting that this could become the new norm. I certainly hope that will not be the case,” he said in a press conference at the AAPA’s 70th Assembly of Presidents (AP70) here today
Wong also said airlines were exploring ways to determine appropriate pricing levels across different markets, including through fuel surcharges and fare adjustments, while ensuring that air travel remained within passengers' affordability.
He noted that engagement with governments was important to address rising operating costs, which could become unsustainable if elevated fuel prices persisted over the longer term.
“I would urge governments to engage with their respective national carriers to explore solutions.
“These may differ depending on individual carriers, market conditions and the urgency of their respective situations, but hopefully the discussions will lead to better solutions and more sustainable airline operations amid the current high oil and fuel prices,” he said.
On sustainable aviation fuel (SAF), Wong said airlines face a significant challenges in meeting the industry's target of achieving a five per cent SAF uptake by 2030, citing high production costs, limited availability and the need for stronger government support.
He said the target was set as an aspirational milestone to accelerate aviation decarbonisation and encourage SAF production, but acknowledged that it would be difficult to achieve with only about four years remaining.
He said feedback from across the industry indicated that affordability and supply remained major obstacles to wider SAF adoption.
“While the industry is committed to achieving the five per cent target, we need substantial assistance and support to make it possible, and that support needs to start now.”
Wong said the challenge was compounded by elevated conventional jet fuel prices, prompting airlines across various markets to introduce fuel surcharges.
“Airlines are still unable to fully offset the impact of current fossil fuel prices. When it comes to SAF, the challenge is even greater. From a financial and economic perspective, this presents an enormous challenge for airlines. This is why we have been emphasising that while the industry wants to achieve the five per cent target, we need substantial assistance and support to make it possible,” he added.
-- BERNAMA