The price of air tickets should start coming down soon because of the world financial crisis, experts are predicting, while ruling out a plunge that would endanger the health of airlines.
“If you keep prices too high you’re going to lose more passengers,” said Geoff van Klaveren of Exane BNP Paribas, against a background of both companies and tourists cutting back on air travel.
Cut price airline Ryanair’s chief executive Michael O’Leary forecast a reduction on an average ticket of between 15 percent and 20 percent by the end of March, and claimed to be attracting passengers from more conventional companies like British Airways.
Most airlines use the yield management system, whereby prices are adjusted by computer on an almost daily basis in line with demand, starting relatively and then rising if a particular flight fills up, or falling if it does not.
“However, company profit margins are narrow and they cannot really engage in a price war,” said Didier Brechemier, a consultant with Roland Berger.
Few airlines have yet adopted an aggressive pricing strategy, as they try to recover from the massive cost of fuel, which neared US$150 a barrel in mid-July, forcing them to slap surcharges on tickets.
While oil has now fallen to one- third of this level, companies have held back from price-cutting at the same rate, while from time to time announcing a reduction in the surcharges since September.
At the same time they have adopted other tricks to keep the money coming in, such as the introduction by the leading European airline, Air France-KLM, of a 50 euro (US$63) charge on economy class seats located near the emergency exits, where passengers enjoy more legroom.
The same company is also introducing an extra class between business and economy toward the end of next year and Brechemier predicted that others would follow suit.
“This project is perfectly matched to the crisis and we are in a hurry to put it into effect,” said Air France-KLM deputy CEO Pierre-Henri Gourgeon, adding that it would allow businesspeople to continue traveling in reasonable comfort while saving money.
The global airline industry — forecast to lose US$4.1 billion this year by industry body IATA — is also fast consolidating in a bid to reduce costs by achieving economies of scale.
Last week, German airline Lufthansa announced a takeover offer for loss-making rival Austrian Airlines (AUA) and Irish low-cost airline Ryanair made a 748 million euro cash offer for national rival Aer Lingus.
British Airways said on Tuesday it was “exploring a potential merger” with Australian rival Qantas as part of a broad tie-up.
It is also in talks with Iberia and American Airlines.
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary