Monday, May 26, 2008

High Oil Prices to Hit Airlines

Further to our previous blog on Willie Walsh's claim that we've hit the end of cheap flights, Louise McBride has an equally downbeat piece in the Sunday Independent, where she includes a few of Michael O'Leary's typical one-liners.

"Anything is possible," said O'Leary when asked if oil could soar to $200 a barrel. "But do I think it's sustainable? No. Whatever the forces driving oil prices up, $150 per barrel looks more likely than $100 over the next few months"

O Leary says he believes oil prices will stay at about $130 a barrel. "Long-term investment decisions are being made at $70 a barrel. But the price won't drop to that level this week. The truth be told though -- no-one knows what's coming next. Most of us are hoping that the latest surge in oil prices is a short-term spike."

O'Leary continues; "only four airlines would survive on an oil price of $200 -- British Airways, Lufthansa, Air France and Ryanair."

The whole Sunday Independent article can be found here.

Another feature in the Business section of the Sunday Times yesterday by Brian Carey claims Ryanair is to cut more than 20 planes from non-profitable routes over the winter as fuel prices continue to rise. We can't find this piece on-line as it is only in the Irish version of the paper but if anyone can find it we'd appreciate the link.

The Times today also has a feature this morning saying that airlines are being asked to pay for fuel in advance by suppliers fearful that they will go out of business before making payment - see here. It's all blue skies and happiness these days.

This is all scary stuff indeed, but what does it mean to the overseas property investor who, naturally, depends on flights for accessibility? Who knows, but time will no doubt tell. It certainly doesn't look like flight access is going to get any cheaper whatever happens, so if it costs you a lot of money to get to your chosen destination at the moment, expect it to get a whole lot more expensive before the end of the year. In the midst of a severe economic nosedive it would appear that many overseas lifestyle property purchases could become very expensive added extras indeed.

For an advice article on the risks of basing your purchase decisions on the availability of cheap flights click here.

For other stories referring to airlines click here.

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