Will rising fuel costs lead airlines cutting free alcohol on long-haul flights?
That’s the prediction made by Bangkok-based aviation consultant Mathieu De Marchi, at Landrum & Brown. He believes OPEC’s recent decision to cut oil production for the first time in eight years, along with oil prices rising 30% in 2016, will mean some airlines will have no choice but to cut premium services to customers.
He says Asian carriers will be particularly affected by the knock-on price rises because their profit margins are about half of countries such as the United States.
Airlines such as Cathay Pacific Airways and Singapore Air are also already battling excess capacity and declining premium traffic. Cathay experienced an 82% drop in net income from January to June this year.
De Marchi told The Sydney Morning Herald that In order to survive, some Asian airlines may be forced to copy the tactics of low-cost carriers and charge for extras such as food, alcohol and checked-in baggage, which have previously been taken for granted on long-haul flights.
“More full-service airlines in Asia Pacific might consider doing the same,” he said.
“Cathay is going to have to” start charging customers for extra services, added Neil Hansford, chairman of Strategic Aviation Solutions, an advisory business north of Sydney.
Australia’s natural carrier, Qantas, assured the SMH that it has no plans to introduce additional costs to passengers.
“As a full-service airline, we don’t make a habit of introducing new charges,” Andrew McGinnes, a Qantas spokesman, said in an email. “Through our transformation program, we’ve focused on removing cost by becoming more efficient.”
