Air fares will rise due to oil prices

Aer Lingus’ chief executive has said it is inevitable that the airline’s fares will rise as a result of rising oil prices.

Lynne Embleton said that fuel costs are a large part of an airline’s overall cost base, typically accounting for 25-30%.

“When fuel prices go up, it’s inevitable that eventually that will trickle down to customers,” he said.

“It doesn’t happen right away, but one would expect the industry to recoup those costs,” he added.

The CEO stated that the airline still has low fares available for both European and US destinations. “But ultimately we see fuel costs need to be reflected in the price,” he added.

Ms Embleton also said Aer Lingus’s plans to recover its level of services and passenger numbers were not affected by the disruption caused by staff shortages at airports, including Dublin and elsewhere.

“We’re still flying the schedule that we set, we’re already at 85% of 2019 capacity and as you know we’re aiming to get to 90% at peak and we’re absolutely on track to do that.” she said.

“The impact of supply chain shortages and issues with airport security has been seen globally at many airports around the world and we are not immune to that,” he added.

“We have recruited, we are satisfied with the number of people who want to join Aer Lingus, and we are growing very well,” he said.

Aer Lingus’ chief executive said advance bookings had been very strong, especially for leisure travel, both transatlantic and short-haul.

However, he said that, unlike the rest of the IAG group, Aer Lingus is seeing a slower pick-up in short-term bookings, especially for business.

“Ireland has taken longer to come out of Covid restrictions than other markets, still had pubs and restaurants closed after 8pm a few months ago, and we still see it being relatively slow to get back to the office and back to normal in Ireland” , said.

“So I see business activity lagging a little bit, but that should come back over time,” he said.

Meanwhile, it emerged today that Aer Lingus used its Heathrow landing slots as collateral by securing an additional three-year €200m credit line from the state-backed Irish Strategic Investment Fund (ISIF) earlier in this year.

“In the event that Aer Lingus were unable to pay the debt, then the Irish government and ISIF would have influence over how those slots are used, but obviously our intention is to honor this and pay the debt as we have.” down,” said Mrs. Embleton.

Under the agreement to sell Aer Lingus to IAG seven years ago, the Government received a commitment that the valuable Heathrow slots it operated would be used for Irish routes for at least seven years.

That moratorium ends this year.

However, the Government will continue to have a veto on the sale of slots.

The ISIF agreement, reached in March, is the second financing agreement of its kind reached between Aer Lingus and Aer Lingus.

In December 2020, ISIF agreed to lend €150 million to the airline and it was subsequently arranged that year and in 2021.

However, Ms Embleton said the deal was not assured at Heathrow slots.

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