28 July 2008 / by Rachael Stiles
As the cost of oil soars, more and more airlines are reigning in the quantity of flights they run, prompting industry analysts to suggest that this could be a sign that the boom of budget airlines could be coming to a standstill.
Budget airline easyJet has become the latest one to cut flights, a move that will see the capacity at Stansted Airport reduced by 12 per cent during the winter compared to last year.
The news of easyJet’s diminished flight plan comes just weeks after Ryanair announced that it was cancelling 250 of its winter flights.
Analysts have predicted that major airlines could lose as much as £3million during the next year unless the cost of fuel comes back down. The traditional model of the budget airline is founded on stimulating demand with cheap prices, so the high cost of fuel does not bode well for them.
There have also been warnings that airlines will try to recoup their costs in other ways too, such as charging for food and luggage, which most of the major airlines do not currently charge for.
Jeff Carr, group finance director at easyJet, said that the company is now paying twice as much for fuel now than it was three months ago, but chief executive Andy Harrison is adamant that the company is still going strong through the credit crunch.
“The two things that are certain is that easyJet has continued to strengthen its business during the first half of this year” he said, “and, secondly, that we will emerge from a high oil price environment as a stronger winner for a number of reasons: we have a low cost model; we have a substantial competitive advantage; we have a new fuel-efficient fleet; we have a strong balance sheet; and we have Europe’s number one air transport network.”
Saving money on travel insurance is more important than ever now that cheaper flights could become a thing of the past, experts say, urging travellers to save money where they can.
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