Air fares are set to rise sharply due to fuel prices

The international tourism sector will experience one of its worst moments as a result of the war in Ukraine and significant losses are expected

The Russian invasion of Ukraine continues to leave its mark on an international economy increasingly affected by this conflict.

Rising oil and petrol prices are revealing a very high energy dependence on Russia, which means that it will now have to opt for other forms of energy. As a consequence of this increase, the tourism sector all over the world is going to suffer the reprisals of the war and, with the high cost of petrol, will have to compensate for the losses by raising the price of passenger tickets.

"Flying will undoubtedly become more expensive for consumers. It is inevitable that higher oil prices will ultimately be passed on to consumers in the form of higher ticket prices," says Willie Walsh, director general of the International Air Transport Association (IATA). He also added that, for airlines, fuel is the most important and fundamental element to be able to operate, so they will have to cover costs in some way.

Therefore, all economic experts say that airlines are going to enter a delicate moment where they will record collective losses. These are expected to amount to $9 billion this year, but all point out that this is still a big improvement on 2021 when anti-COVID measures were predominant. That year saw US$42 billion in losses, a very worrying figure for the industry.

"Tourists should be prepared for the cost of flights to rise," Walsh said during a BBC interview, quoted by The National News.

But the Russian-Ukrainian conflict is not the only factor behind the crisis. According to Walsh, the airline industry is still reeling from the problems of the coronavirus. With the arrival of the disease, with so many restrictions and fewer flights, there were major staff cuts across all travel companies, which severely affected the industry and increased unemployment.

"People are flying in increasing numbers. It is a time for optimism, even if there are still cost challenges, particularly fuel, and some lingering restrictions in some key markets," said the IATA chief. However, Walsh said he had no regrets about the job cuts made at British Airways when he was head of the airline.

Although tourism is recovering more, over time it has shown that COVID has been a major factor in its source of income and it seems that now the invasion of Ukraine is also going to affect it. IATA stresses that people are already flying again and trusting airline companies again, but they believe that governments are not ready to live with the virus yet and, whenever there are waves of contagions, they will again paralyse all sectors of nations.

"Governments must have learned the lesson of the COVID-19 crisis. Border closures generate economic pain, but do little to control the spread of the virus. With high levels of population immunity, advanced treatment methods and surveillance procedures, the risks of the virus can be controlled," Walsh stresses.

Concern about rising global inflation

All of these factors are determining factors for the economy and experts say that COVID, war and rising prices are all contributing to rising global inflation. In the case of rising gasoline prices, right now, Brent crude rose in March below 140 dollars a barrel. This is the benchmark for more than two thirds of the world's crude oil, so its price has risen. Although it is worth noting that some gains have been given up and the barrel trades on the world stock market at around 105 dollars.

The duration of the conflict in Ukraine, moreover, does not help the situation. All the signs are that the longer the war drags on, the more we are all going to suffer in economic terms. Since February, global inflation has soared, coinciding with the rise in food and commodity prices.

The International Monetary Fund (IMF) forecasts that, by the end of 2022, global inflation will reach 5.7% in advanced economies. But emerging market and developing countries will be more affected, with inflation as high as 8.7%.