Airlines resist lowering fares, despite fuel price drop

The Ministry of Public Works has urged airlines and shipping companies to pass on ticket prices in their fares following the fall in the price of oil, but they are resisting, arguing that their fuel purchases are for the medium term.

 

The Confederación Española de Agencias de Viajes (CEAV) has also joined this petition, in its case claiming the companies to reduce fuel surcharges, the so-called YQ rate;

La Aeacute;n has also joined this petition, in this case claiming to the companies the reduction of fuel surcharges, the so-called YQ rate, since the price of oil could be at its lowest value since 2010.

The Asociación de Compañías Españolas de Transporte Aéreo (ACETA) points out that each airline's ability to reduce its rates in the face of lower oil prices could be at its lowest value since 2010;a to reduce its tariffs in the face of lower crude oil prices depends on the margin of maneuver that allows it the anticipated purchase of fuel and the fixed price agreed at the time with the financial entity".

The employers' association also explains that airlines take out hedging insurance at a fixed price with financial institutions to protect themselves from fluctuations in the price of crude oil, generally upwards. ACETA groups, among others, Air Europa, Air Nostrum, Binter Canarias, Evelop, Iberia, Iberia Express and Vueling.

On the other hand, the association argues that if the airlines were to adopt a common position on pricing policy, they could take a more active role in the airline industry;The agreement could be considered a cartel position and, consequently, punishable by the competition authorities.

According to estimates by the International Air Transport Association (IATA), air fares could fall by around 5% in 2015 after adjusting for inflation if the price of oil remains stable at current levels. Fuel expenditure accounts for between 30% and 40% of the cost structure of airlines, depending on the routes.