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BA chief's prediction for the future:
High cost of oil will see ticket prices go up and some carriers may go bust
LONDON - THE era of cheap flights is over, declared the boss of British Airways, as the price of oil hit a record high for the third day running. With the oil price hitting all-time highs of more than US$135 (S$180) a barrel this week, BA chief executive Willie Walsh said the entire aviation industry was heading into uncharted territory, and predicted a rash of airline failures, the Telegraph newspaper reported yesterday. The soaring cost of oil along with global economic uncertainty would force airlines to raise fares in a scramble for survival that will see many of them go bust, he said. A day after the world's biggest carrier, American Airlines, announced huge cuts in routes and jobs, and announced plans to charge passengers for their first checked-in bag because of the rising oil price, Mr Walsh said budget airlines would have to increase fares, or else many unprofitable companies would simply bite the dust. 'The industry has no future if it does not price in its costs,' he was quoted as saying by The Guardian. Asked if cheap fares for customers who book flights far in advance would disappear, he said: 'My view is yes.' The prediction may mean the end of a golden era for consumers, who have become used to cheap flights to cities all over the globe. It is an era which has revolutionised the travel industry by putting hitherto unheralded destinations such as Jerez and Tallinn on the tourist map. 'This is about whether airlines can survive. If you look at a lot of the low-cost carriers around Europe, a lot of them were not able to make money when oil was US$80 a barrel,' he said. Fuel accounts for around a third of airline budgets, and its escalating price is forcing airlines to pass on the cost to consumers because they are running out of overheads to slash in their own businesses. Mr Ned Raynolds, an American Airlines spokesman in Manhattan, said the increases announced by the company on Wednesday were necessary. 'We are doing what we need to do in order to service and serve the public,' he said. 'Those are the fees that we have determined we need to collect, and there are no present plans for changing them.' Analysts say they believe other airlines will eventually join American in raising some fees. United Airlines of Chicago says it is 'seriously studying' the option of charging passengers for checking in their baggage, and Delta Air Lines, Northwest Airlines and US Airways, said they are also evaluating the idea. 'Ultimately, the high cost of fuel will put pressure on them,' said Mr Raymond Neidl, who follows the airline industry. In the meantime, some analysts question how far passengers can be squeezed before demand deteriorates. 'All we have done is factored in the oil price. We have not even factored in a consumer slowdown yet. The real problem is the price sensitive consumer. What happens to them when they push their prices up,' said Mr Andrew Fitchie, analyst at stockbroker Collins Stewart. Tourists might stay closer to home or travel by train, Thijs Berkelder, an airline analyst in Amsterdam, said, while businesses might opt for video conferencing. LOS ANGELES TIMES-WASHINGTON POST, ASSOCIATED PRESS
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The Blogs 
How much longer before the petrol becomes a thing of the past ?
What will happen then ?