“It’s typically our single biggest cost, so it would help to offset any weakening demand if we were to witness a slowdown,” Walsh said in an interview with Bloomberg Television at IATA’s annual general meeting in New Delhi. “It also tends to have an impact on pricing. There’s almost a direct correlation between the price of oil and and the price of airline tickets.”
Airlines have become increasingly cautious about the demand outlook as global economic dislocations prompted by US President Donald Trump’s tariffs hurt demand. At the same time, a diminished economic outlook has also depressed oil prices, providing a cost advantage for carriers.
Walsh said that while lower ticket prices typically stimulate demand, it also “clearly drives down the overall revenue for the industry”.
Global aviation executives are meeting in New Delhi over the next few days to discuss the state of the industry. Walsh is set to unveil his formal outlook for profitability and revenue for the airline industry on Monday.
