Life Travel Airfares to drop in 2015

Airfares to drop in 2015

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Travellers should pay less to fly next year as the slide in the oil price allows airlines to cut fares and lift profits at the same time.

The International Air Transport Association, which represents the airline industry, expects airfares to slide by about five per cent globally in 2015.

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Crude oil prices have continued their slide.
Crude oil prices have continued their slide.

“The fall in the price of fuel is expected to lead to cheaper airfares for consumers,” the IATA said in a report.

“After adjusting for inflation, average return air fares (excluding surcharges and taxes) are expected to fall by 5.1 per cent.”

If that kind of price cut is seen in Australia it will be an added bonus for passengers who have benefited from lower fares in recent years because of a bruising competition between Qantas and Virgin.

Oil prices have fallen around 40 per cent since July due to overproduction and slowing demand and a stand-off between OPEC countries and US shale oil producers.

Qantas on Monday played down the impact of the sliding price, saying it has only taken about $20 million off its $4.5 billion annual fuel bill.

Meanwhile, both Virgin and Qantas have said they have no plans to remove fuel surcharges on international flights.

Because airlines buy fuel well in advance, the IATA says they are yet to see the benefits of the lower oil price, though that should change next year.

And if or when it does, airlines expect to become more profitable.

The IATA expects global airlines to make a collective profit of $US25 billion ($A27.05 billion) in 2015, which is a more than 30 per cent jump on this year.


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