British travellers already thinking twice about flying to Europe this summer as the falling value of the pound cuts into their travel budget received more bad news yesterday with indications that the era of cheap flights may be drawing to an end.
Soaring fuel costs have put airlines under financial pressure which, analysts say, will inevitably be passed on to passengers through increased ticket prices, fuel surcharges and baggage check-in fees. The warnings follow a wave of airline bankruptcies in the UK and the US, and crippling oil price rises which have seen the cost of fuelling a transatlantic flight quadruple since 2000 to $44,000 (£22,100). The pressure on the airlines has been most acute this year as the global oil price rose from $80 a barrel to nearly $120.
Gosh, markets work!
As an input becomes more expensive, prices to consumers rise and thus less of that input is demanded.
Pretty neat system, eh?