Sunshine flights cut as fuel costs take off
May 23 2008 By Jez Davison, Evening Gazette
SUN-SPOT air carrier Thomson is to cut flights from Durham Tees Valley Airport, as rocketing fuel prices and the credit crunch continue to take their toll on the industry.
As the price of crude oil soared to $135 per barrel yesterday before cooling to $131, American Airlines said it was planning to cut flights, charge passengers to check in luggage and axe 75 jets to free extra revenues.
Amid fears that other airlines will follow suit, Durham Tees Valley confirmed Thomson was reducing the number of weekly flights running from Teesside from 14 to six. The airline operates flights to Alicante, Tenerife, Majorca, Ibiza, Menorca and Reus.
Despite the news Durham Tees Valley chiefs said they were pressing ahead with expansion plans, which include boosting annual passenger numbers from 750,000 to 3m by 2015.
Hugh Lang, former director at the airport and currently group airports director for Peel Airports, said Thomson’s decision not to operate single aircraft bases at UK airports affected London Stansted, Bristol, Leeds Bradford and Liverpool John Lennon as well as Durham Tees Valley.
He added: “We still believe core demand for flights to summer hot spots remains strong. Passengers are moving from the traditional charter holidays and turning to flights with low cost airlines.”
Airlines are hoping to navigate the current economic turbulence by seeking alternative revenue streams to offset fuel prices - and passengers are being hit with extra surcharges.
But Mr Lang said it was unlikely passenger fares would spiral to levels witnessed ten years ago, even though “the cost of air travel is likely to increase in the short term if fuel prices remain high.”
Michael O’Donovan, managing director of Eurojet which supplies consultancy services to the industry, said it was “inevitable” that other airlines would look to recoup costs in the same way as American Airlines and Thomson.
He said: “A few years ago fuel accounted for around 13-15% of an airline’s costs. Now that figure is somewhere in the region of 35-40%.
“Airlines have to claw back these costs somehow. Some are imposing extra fuel surcharges and others, including Ryanair, have said they will park aircraft.”
