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Airlines can’t afford to raise ticket prices

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Brno – Tourism experts have been declaring for some time now that airfares have bottomed out and will start climbing again. The anticipated take-off has been delayed, however, and prices remain at an all-time low.

Experts still say that prices will increase, but later, which is good news for those planning to fly abroad now.

“Airfares are now at one of their lowest levels ever. Airlines already adjusted their flight schedules in spring because of the crisis. To be on the safe side, they reduced the number of rotations — the number of flights between individual destinations,” said Tomio Okamura, spokesman and vice-president of the Association of Czech Travel Agencies and Agents. Because airlines anticipated the effect of the economic crisis, passengers now do not have to pay for empty planes.

Airfares have increased moderately on flights outside Europe where the high season ends in mid-August, Okamura said. Flights to some destinations could be even cheaper in the autumn, he added.

No major swings
Despite adjusted schedules, even big airlines took losses in the first half of this year. Now they need all the passengers they can get, and ticket price is one of the most powerful tools in the battle for clients.

“Given the low demand, air carriers cannot raise prices too much now,” Cyrrus analyst Ondřej Moravanský said. “That is why I think prices will more or less stay at their current level. There is no room for prices to fall further, and the airlines cannot afford any raise them,” he added.

Those who watch offers from a number of airlines agree. “Prices have been very low, and we definitely have no sign that they will start growing. Of course, they reflect high seasons in individual regions of the world, but we are not expecting any major swings,” said Leona Špačková, marketing director at Student Agency.

Oil prices and bankruptcies
Airfares could rise, however, on the recent increase in crude oil prices.

“It is common practice that when oil prices grow, airlines introduce fuel surcharges. They usually keep the surcharges up even after oil has started going down again,” Moravanský said. But it is likely that airlines have long-term contracts for fuel at fixed prices, he added. “So it is possible that even if oil prices see an extended rise, the airlines will have supplies at lower prices,” he said.

Another factor that can influence prices of flights from the Czech Republic is the fate of Slovak low-cost airline SkyEurope. The company is currently the second biggest air carrier at Prague Airport and is experiencing financial difficulties. An Austrian investor is rumored to be coming to SkyEurope’s rescue.

But if the attempt to save SkyEurope fails, competition at the Prague Airport would weaken and other airlines could introduce higher prices on destinations formerly served by the Slovak company.

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