Airlines not enjoying benefits of cut-price fuel

Earlier this year, SA businesses and citizens had expected to enjoy cheap fuel because of the plummeting oil prices.

The international travellers and traders amongst us had also expected price cuts in air tickets and cargo tariffs for the same reason.

But neither was to be realised.

The budget introduced a vastly increased fuel levy and Road Accident Fund (RAF) contribution, which ate up all the benefit of cheaper pump prices.

And airlines were very cagey about passing on lower jet fuel prices to their customers.

The latest excuse is that the stronger US dollar has offset “a lot of the benefit” of lower oil prices for airlines, according to Tony Tyler, director-general of the International Air Transport Association (Iata).

He told a press conference that, while Iata will update its airline profit forecast in June, the remarks reflected the currency challenges carriers face just as some begin to report first-quarter 2015 earnings.

According to his reckoning, global oil prices have fallen nearly 50% since last June, but at the same time the US dollar currency index has risen more than 20%.

He also noted that the costs of ground-handling, catering and other aircraft services have risen for many airlines – and that this was because contracts were often billed in US dollars.

Which leaves the vital question. Just who the devil is actually enjoying the benefit of cut-price fuel?