Airline chief wary on rise in fuel prices

The president of Emirates Airline has warned that fuel prices are reaching unsustainably high levels for the aviation industry.

His comments come before the publication of the airline's financial results next week.

"I do not believe that the global economy will be able to sustain that kind of price for too long because it will bring us all to our knees, not just the aviation industry but everything else, so I'm hoping that equilibrium will come into play sooner rather than later," Tim Clark said at the Arabian Travel Market in Dubai yesterday.

Mr Clark said fuel prices accounted for 43 per cent of the airline's costs compared with between 12 and 13 per cent 10 years ago.

Airlines around the world have been forced to increase fares by adding fuel surcharges as oil prices have risen well above US$100 a barrel. But Mr Clark said there was a limit to how much the industry could increase charges without driving customers away.

If oil prices remain high "the peripheral carriers, the ones that don't have the strong balance sheets, will be becoming more flaky", he said.

"Some of those will be some of the low-cost operations as well because they're facing punitive fuel charges, and it's far more difficult to keep layering on surcharges because their business model requires the kind of level of pricing they come in with. Nothing can sustain it at this level, so something has to be done."

Emirates was not considering asking the government for help with fuel subsidies, according to Mr Clark. He said it had been dealing with the prices by cost adjustments, among other mechanisms.

He said it had been a "tough year" for the airline, which will report its results for the financial year next Tuesday.

rbundhun@thenational.ae