The automotive sector is being affected by the rising price of oil, but it is not the only sector. Soaring fuel prices are also having a major impact on the aviation sector and airlines. In this article, AEROAFFAIRES presents the impact of rising fuel prices on aviation and business aviation.
Les causes de la hausse des prix du carburant
Fuel prices have been rising steadily in recent months, with the war in Ukraine driving up prices. Indeed, the fear of an embargo on Russian oil products is one of the main reasons. Buyers then redirected to other markets such as North America and the Middle East. As a result, prices for Russian products have fallen while prices in these other markets have risen. The greater the demand, the lower the supply, and the result: higher prices. And in aviation and business aviation all the more so because since the economic recovery of tourism post health crisis of 2019, demand is coming back. In addition, the closure of the Ukraine/Russia airspace is forcing some international flights to make long detours and thus increasing operating costs and oil consumption.
There are also other reasons for the price increase, such as the loss of value of the euro against the dollar.
Impact on air fares
The increase in air fares is estimated at 14%. Fuel is one of the main expenses in the organisation of a flight, after labour. Indeed, it represents up to 35% of the operating costs of airlines. Faced with this rise in prices, they are obliged to increase their fares on their flights.
Business aviation is affected differently by this price increase because when a company or individual is able to buy a multi-million dollar private jet, the price of fuel is not a concern. This is a boon for business aviation, which is coping with fuel price inflation, compared to the commercial aviation sector, which is suffering. However, for the business aviation industry, such as air brokerage companies, they have to deal with rising fuel prices, which also affect the price of a private flight, while offering the best rate to customers, defying the competition.
The challenge for private aviation operators is to retain the new customers who have flocked during the pandemic, despite the recovery of commercial aviation and the fuel price shock.
Finding alternatives to jet fuel
Rising fuel prices can be a motivating factor in trying to develop new fuel alternatives. This can be coupled with the environmental impact that aviation can have, as aircraft manufacturers are building more and more environmentally friendly aircraft. However, despite the rising price of paraffin, more environmentally friendly fuels are still more expensive than paraffin, which is the main reason why airlines prefer to use it. It is currently still two to five times cheaper than a more environmentally friendly alternative. Moving away from paraffin is a huge challenge for the aviation sector, which is calling on governments to take action to reduce the price of alternative fuels.
For your next business trip or holiday, if you want to avoid price hikes, we advise you to book your flight as soon as possible.
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