Pax soon to benefit from falling oil - says SRB

Just watching the Money Programme Working Lunch on Beeb2 and SRB being interviewed - said passengers should soon see the benefit of falling oil prices on Virgin Atlantic, and if the price of oil falls to $50 or so a barrel then a significant benefit.

Good news.

[mitchja]

Sounds good in theory, but I cant see crude reaching $50 a barrel any time soon [:?]

Dont forget that aviation fuel is still more expensive than crude. At present crude is ~$91 a barrel and jet fuel is ~$129 a barrel.

Regards

Originally posted by slinky09
Just watching the Money Programme Working Lunch on Beeb2 and SRB being interviewed - said passengers should soon see the benefit of falling oil prices on Virgin Atlantic, and if the price of oil falls to $50 or so a barrel then a significant benefit.

Good news.

Hurrah! would be great if we got a refund or credits on already booked flights[^]

cheers
alex[:D]

Can anyone recall what the price of Aviation fuel was prior to the introduction of the surcharges?

Cheers
Jerseyboy

Originally posted by jerseyboy
Can anyone recall what the price of Aviation fuel was prior to the introduction of the surcharges?

Cheers
Jerseyboy

The last time the surcharge went up was when oil (not JetA) went over $100 a barrel, it's been below that for several weeks now. That said, VS's hedging position may still be above $100 at the moment so we might need to wait for some hedges to expire and new ones come in.

Originally posted by slinky09
The last time the surcharge went up was when oil (not JetA) went over $100 a barrel, it's been below that for several weeks now. That said, VS's hedging position may still be above $100 at the moment so we might need to wait for some hedges to expire and new ones come in.

... or for BA to reduce theirs

[mitchja]

BA should be in a better position to reduce theirs before VS as BA probably have lower running costs, although thats not going to happen is it [:w]

Regards

[Darren Wheeler]

The problem isn't so much price as stability of the price. All it wants is for a hurricane, Iran to throw a wobbly, Russia to invade another neighbour etc. etc. for the price to sky rocket.

Originally posted by Darren Wheeler
The problem isn't so much price as stability of the price. All it wants is for a hurricane, Iran to throw a wobbly, Russia to invade another neighbour etc. etc. for the price to sky rocket.

That's the advantage of hedging - it gives that stability of price to the Airline.
It is possible to hedge both oil price and the extra cost of jet fuel (crack)

jerseyboyCan anyone recall what the price of Aviation fuel was prior to the introduction of the surcharges?

Month by month price here

Projecting future price is complex - see reports such as this.
Despite serious decline in jet fuel demand (p20 of above) the long term oil price is still projected to rise (see end of report)

However the current state of the economy could really drive oil price down short term .... anyone care to predict how long that will last?

[Darren Wheeler]

Until all the bankers have jumped?? [}:)]

So ... oil is now down to $80 or less, that's a full 20% lower than the price that led to the last surcharge hike. How soon before the exchange rate effect begins to wear off?

The US dollar is now much stronger too

Oil futures are around at $83 today.
In terms of the UKP (£) value that is equivalent to about 98% of the cost when oil was $100
Only down a little on the value that triggered the surcharge but what must also be considered - what price was VS actually paying when they put up the surcharge? - they were heavily hedged!

Oil futures now down to $75 (down $3 today so far) - £ up to $1.75 - seems only right that both BA & VS have reduced the fuel surcharge.
Could be more to come ....