American Airlines warns of fare increases if oil remains high

American Airlines warns of fare increases if oil remains high

SYDNEY (Reuters) – American Airlines (AAL.O) warned airline passengers might ultimately face increased ticket costs if oil costs stay high, prompting carriers to take away seats from the market.

FILE PHOTO: An American Airlines aircraft takes off from Los Los Angeles International airport (LAX) in Los Angeles, California, U.S. March 28, 2018. REUTERS/Mike Blake/File Photo

Oil costs have risen round 50 p.c in comparison with the degrees seen final yr and that’s placing strain on airline income.

“If it becomes clear this is the new normal you would see over time less capacity and growth in the industry and therefore higher prices, but I don’t think that’s going to happen in the near term,” CEO Doug Parker informed reporters on the sidelines of the annual IATA assembly of airline executives in Sydney.

IATA, which represents about 280 airways comprising 83 p.c of international air site visitors, has stated that on Monday it can revise down its forecast for business profitability this yr as a result of increased oil, infrastructure and labor prices.

The United States final month agreed a cope with the United Arab Emirates and Qatar to resolve claims from the three largest U.S. carriers that Gulf airways had obtained unfair authorities subsidies.

Parker stated he was happy with the consequence of the talks however wanted to see extra from the Gulf carriers earlier than American Airlines might contemplate partnerships with them.

“We haven’t had enough time to make sure that those resolutions have the effect that we hope for, so we shall see,” he stated.

Qatar Airways had plans to purchase a stake in American Airlines final yr, however reversed that call, saying an funding didn’t meet its aims. American Airlines executives had opposed the share purchase.

When requested on Sunday whether or not he can be open to investments from Gulf airways additional down the road, Parker stated American Airlines didn’t want such transactions. He added, nonetheless: “We are open to investments from everybody.”

Reporting by Victoria Bryan; Editing by Tim Hepher and Dale Hudson

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