William Walsh, director general of the International Air Transport Association (IATA), said airfares could become more expensive – due to the lack of screening capacity and the financial condition of airlines.
Walsh told CNBC’s Hadley Gamble on Wednesday that a decline in refining capacity during the pandemic and higher jet fuel prices due to increased fuel demand are “concerns” for the airline industry.
US refining capacity is down 5.4% in 2022 since peaking in 2019 – an eight-year low. The immersion takes place after refinery closure and conversion to produce more renewable fuels.
Walsh added that while consumers are paying higher fares, airlines aren’t necessarily making a profit.
“And given the financial situation of many airlines… It’s not that the airlines are making money, [they] are just passing on a cost that they can’t absorb themselves and they can’t avoid,” he said.
Russo-Ukrainian War
But another factor that could contribute to higher fares is Russia’s announcement of a military deployment, said Qatar Airways CEO Akbar Al Baker.
Russian President Vladimir Putin on Wednesday announced a partial military deployment in Russia, putting the country’s people and economy in a wartime position as Moscow’s invasion of Ukraine continues.
Al Baker tells CNBC that China’s Covid policies are “smallest of the bunch.” [his] “And the biggest concern of the airlines is the escalation of the Russian-Ukrainian war.
“For me, the biggest worry is the spreading conflict, [will then] fuel inflation, putting more pressure on the supply chain,” he added. The net result is that there will be fewer passengers on my plane. “
“It also worries me… [instability] the price of oil that I don’t want to pass on to the passengers, which would keep them from traveling. “
Oil prices jumped more than 2% following Putin’s announcement, following concerns about an escalation of the war in Ukraine and reduced oil and gas supplies.
However, Al Baker insists Qatar will continue to fly to Russia as long as it is operationally safe.
“We will continue to fly to Russia, we will continue to serve the people … We are not a political institution. We are an industry that serves ordinary people.”
Hope for affordable sustainable fuel
Al Baker called for more investment in alternative fuels, and Qatar Airways “is willing to invest in sustainable aviation fuel” provided it is “reasonably priced”.
“I have no problem [paying] a little more, but they can’t pay four or five times the price of normal F-gas. “F-gas, also known as fluorinated gas, is a man-made gas that is used for various industrial purposes.
“If we were pressed to do that, you as a passenger would have to pay for it,” he said.
Walsh repeated his hopes of investing more in sustainable aviation fuel production rather than traditional refineries, citing environmental concerns.
Last year, IATA set a target for the global air transport industry of achieve net zero carbon emissions in 2050.
“Sustainable aviation fuels represent the best option the industry has to achieve our goal of net zero by 2050.”
