The cost of air tickets are expected to start coming down soon because of the world financial crisis, experts are predicting.
Experts are ruling are ruling out a plunge that would endanger the health of airlines.
“If you keep prices too high you’re going to lose more passengers,”
A forecast of reduction in an average ticket of between 15 and 20 per cent by the end of March is predicted, to be attracting passengers from more conventional companies like British Airways.
Most airlines nowadays use the yield management system, whereby prices are adjusted by computer on an almost daily basis in line with demand, starting relatively low then rising if a particular flight fills up, or falling if it does not.
“However, company profit margins are narrow, and they cannot really engage in a price war.”
Few airlines have yet adopted an aggressive pricing strategy, as they try to recover from the massive cost of fuel which neared $150 a barrel in mid-July, forcing them to slap surcharges on tickets.
While oil has now fallen to a third of this level, companies have held back from price-cutting at the same rate, while announcing a reduction in the surcharges since September.
At the same time they have Airlines have adopted other tricks to keep the money coming in, such as the introduction by the leading European airline, Air France-KLM, of a 50-euro charge on economy class seats located near the emergency exits, where passengers enjoy more legroom.
The same company is also introducing an extra class between business and economy which is expected to come into effect towards the end of next year, and it is predicted that others would follow suit.
“This project is perfectly matched to the crisis, and we are in a hurry to put it into effect,”
The global airline industry – forecast to lose $4.1 billion this year by industry body IATA – is also fast consolidating in a bid to reduce costs by achieving economies of scale.