Airline chief wary on rise in fuel prices

Tim Clarke, the president of Emirates Airline, has warned that fuel prices are reaching unsustainably high levels for the aviation industry.

The president of Emirates Airline has warned that fuel prices are reaching unsustainably high levels for the aviation industry.

More Business news: Editor's pick of today's headlines

Last Updated: May 03, 2011

Bin Laden death sparks rally

Terrorist leader Osama bin Laden's death helps lift investor sentiment.

Industry Insights Forum

The planned Khalifa Industrial Zone of Abu Dhabi (Kizad), a huge infrastructure project, is designed to be a major plank in the emirate's diversification away from oil.

Aldar Properties shines as investors await good news

Local bourses did not react to news that Osama bin Laden was killed by US forces as regional markets have bigger issues to worry about, analysts said.

Jumeirah weighs hotel on Saadiyat

Jumeirah is gearing up for its first hotel opening in Abu Dhabi, called Jumeirah Etihad Towers.

His comments come before the publication of the airline's financial results next week.

"I do not believe that the global economy will be able to sustain that kind of price for too long because it will bring us all to our knees, not just the aviation industry but everything else, so I'm hoping that equilibrium will come into play sooner rather than later," Tim Clark said at the Arabian Travel Market in Dubai yesterday.

Mr Clark said fuel prices accounted for 43 per cent of the airline's costs compared with between 12 and 13 per cent 10 years ago.

Airlines around the world have been forced to increase fares by adding fuel surcharges as oil prices have risen well above US$100 a barrel. But Mr Clark said there was a limit to how much the industry could increase charges without driving customers away.

If oil prices remain high "the peripheral carriers, the ones that don't have the strong balance sheets, will be becoming more flaky", he said.

"Some of those will be some of the low-cost operations as well because they're facing punitive fuel charges, and it's far more difficult to keep layering on surcharges because their business model requires the kind of level of pricing they come in with. Nothing can sustain it at this level, so something has to be done."

Emirates was not considering asking the government for help with fuel subsidies, according to Mr Clark. He said it had been dealing with the prices by cost adjustments, among other mechanisms.

He said it had been a "tough year" for the airline, which will report its results for the financial year next Tuesday.