The global aviation industry is benefiting from lower oil prices because they’re bringing down the cost of kerosene, International Air Transport Association (IATA) director-general Willie Walsh said yesterday.
The reduction in oil prices is in turn helping drive down ticket prices, Walsh said.
“It’s typically our single biggest cost, so it would help to offset any weakening demand if we were to witness a slowdown,” Walsh said in an interview with Bloomberg Television at IATA’s annual general meeting in New Delhi. “It also tends to have an impact on pricing. There’s almost a direct correlation between the price of oil and the price of airline tickets.”
Photo: Priyanshu Singh, Reuters
Airlines have become increasingly cautious about the demand outlook as global economic dislocations prompted by US President Donald Trump’s tariffs hurt demand. At the same time, a diminished economic outlook has also depressed oil prices, providing a cost advantage for carriers.
Walsh said that while lower ticket prices typically stimulate demand, it also “clearly drives down the overall revenue for the industry.”
Global aviation executives are meeting in New Delhi over the next few days to discuss the state of the industry. Walsh is set to unveil his formal outlook for profitability and revenue for the airline industry today.
Meanwhile, Indian airline IndiGo said yesterday it had signed an order for 30 more Airbus SE A350-900s, bringing its shopping list for the widebody aircraft from the European aircraft manufacturer to 60.
"We are placing a firm order for 30 Airbus A350-900s," said Pieter Elbers, CEO of IndiGo, a company founded in 2006 and already behind the largest contract by volume in the history of civil aviation — 500 Airbus single-aisle aircraft by 2023.
The Indian low-cost carrier, the country’s biggest by market share, is positioning itself as a significant player in the long-haul market.
"This strategic move will enable IndiGo to spread its wings further and expand its long-haul international network," the company said in a statement.
"This is yet another step in defining the airline’s long-term plans of international expansion."
The A350 planes, with ranges of up to 15,000 kilometers (9,300 miles), will allow it to further expand its network.
"The development of India’s air connectivity in recent years has been nothing short of phenomenal," Walsh said.
Indian domestic air growth is "running at over 10 percent" per year, he said.
The growth of its economy has made India and its 1.4 billion people the world’s fourth-largest air market — domestic and international — with IATA projecting it will become the third biggest within the decade.
Additional reporting by AFP
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