KUALA LUMPUR: Persistently high jet fuel prices could become the new normal for airlines, putting pressure on operating margins and limiting carriers’ ability to pass on higher costs to passengers, according to the Association of Asia Pacific Airlines (AAPA).
Speaking at AAPA’s 70th Assembly of Presidents here today, AAPA director-general Wong Hong said fuel accounted for about 33% of airline operating costs, making elevated prices a significant challenge for carriers.
“I believe so. I would certainly hope it is not, but it looks like these high prices will continue to prevail,” he said when asked whether high fuel prices would become the new normal.
Wong said airlines faced a dilemma between absorbing higher costs and raising fares, which could weaken passenger demand.
“If you start pushing the fares to a certain point, you will start seeing bookings going somewhere else or people start to reduce travel,” he said.
He said airlines had limited flexibility to adjust fares because tickets were often sold months before travel, while fuel prices could change significantly in the meantime.
“Airlines need to sell tickets in advance. You can’t change it all,” he said.
Wong called on governments to work with their respective national carriers to identify solutions, taking into account differing market conditions.
He added that airlines were also grappling with aircraft delivery delays, supply-chain disruptions and higher maintenance costs, although passenger demand had remained resilient.
