28 August 2008

Fuel Takes Another Victim - Niche Flying from Europe

A lot of noise has been made about the impact of the dramatic rise in the cost of fuel affecting US airlines. However everyone is affected. Now comes news that those airlines who offer niche services from Europe are starting to cut back. Even though the price of Jet Fuel is down from its all time highs in May the price is still about $200 more than this time last year. (See chart attached)

This week XL the UK Based leisure group and airline announced it was canceling its winter program to the Caribbean.

Their airline XL Airways will stop flying charters to Grenada, Tobago, St Kitts, Antigua, Barbados and St Lucia from November because, it said, rising fuel costs had obliterated margins on the routes.

As a result BA and Virgin (the surviving airlines on many of these routes) must be breathing a sigh of relief. However pity the poor passenger who bought a package based on these charters as they will most certainly lose their deposits on hotel rooms over Xmas unless they can find alternative arrangements - at this stage very unlikely. It will be particularly devastating to the smaller islands like St Kitts which now loses its only direct EU-Island link.


No comments: