The Chief Executive of Virgin Atlantic said the world airline industry needs a radical increase in prices to survive surging fuel costs and slowing economic growth, Bloomberg reports. Surcharges imposed by airlines on tickets are only recovering about one-third of fuel-price increases, Steve Ridgway said in an interview.
Fuel has surpassed labour as the industry's biggest expense after the cost of fuel doubled in the past year. Mr Ridgway told Bloomberg Television: 'We're going to see some huge changes in the next few years. There is going to have to be a fairly fundamental repricing. That will have an effect on demand and that will ultimately have an effect on capacity balance.'
He said Virgin's strong fuel hedging positions and solid cash reserves mean it's well-placed to ride out the current crisis. 'We're in a relatively strong position, certainly compared to many of our competitors. Carriers are going to go out of business and need to go out of business,' he said.
The airline may see opportunities to expand, possibly through acquisitions, or to join with a bigger group, he added. There has been recent speculation that the airline could merge with Heathrow based bmi, if it is acquired by Lufthansa.
He also commented on the need for more fuel efficient planes, and the frustrations on waiting for late deliveries, as most airlines are looking at 12-18 month delays on their A380 and Boeing 787 planes. He said: 'In this world you want to be flying the most modern, the most efficient fleet you can.' |
