American Airlines has warned that airline passengers may eventually face higher ticket prices if oil prices remain high, prompting carriers to remove seats from the market.

The prices of oil have rose by around 50 percent compared to the levels which was seen last year. Thus increased price is putting pressure on airline profits.

CEO Doug Parker told reporters on the sidelines of the annual IATA meeting of airline executives in Sydney, “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.”

It was reported on Monday that IATA represents about 280 airlines which comprises 83 percent of global air traffic; it will revise down its forecast for industry profitability this year due to higher oil, infrastructure and labor costs.

Last month, The United States agreed a deal with the United Arab Emirates and in January with Qatar to resolve claims from the three largest U.S. carriers that Gulf airlines had received unfair government subsidies.

Parker said that he was pleased with the result of the talks but needed to see more from the Gulf carriers before American Airlines could consider partnerships with them.

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

Qatar Airways had plans to buy a stake in American Airlines last year, but reversed that decision, saying an investment did not meet its objectives. American Airlines executives had opposed the share buy.

When asked on Sunday whether he would be open to investments from Gulf airlines further down the line, Parker said American Airlines did not need such transactions. He added, however: “We are open to investments from everybody.”

 

Mia Noles
Mia Noles is a writer at the Ode Magazine. She holds a Bachelor of Arts English Literature Degree from Leeds University. Her specialty is Celebrity News, History, and World News. She is also a life enthusiast who loves traveling the world and taking part in humanitarian courses. You can contact her at mia@odemagazine.com.

1 COMMENT

  1. Thought that’s why they instituted baggage fees back in May 2008. Guess they forgot about that already.

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