The worst peak for jet fuel has passed – but ticket prices remain at high levels. Now there is concern in the industry that a price war will break out and hit already thin margins, according to BCG analyst Rick Lewis.
”"Everyone hopes no one blinks first," he tells Financial Times.
The situation in the airline industry is described as a ”stalemate.” During the most intense days of the Iran-Iraq war, the price of jet fuel skyrocketed, prompting airlines to raise prices. Even though fuel prices have now come down from their peak levels, customers are still paying the same amount for their tickets.
A single price cut could now trigger a price war, BCG analyst Rick Lewis told the Financial Times.
”Everyone is hoping that no one blinks first and lowers prices, which would create an aggressive price war for late-summer bookings,” he says, emphasizing that margins are still thin due to the oil price increases.
The price of jet fuel reached a peak of $1,900 per tonne during the most intense period of the war, but has now fallen back to $1,300 per tonne, according to the FT.
According to the Financial Times, the higher prices have not yet affected demand, which may explain why the price war has not yet broken out.
Source: DI.SE
