[photopress:aircraft_1.jpg,full,alignright]It is almost as if this site has warned longer, louder and earlier of the effect on travel of all sorts of the raising of oil in price. Current estimates for next month are $150 a barrel – by the time you read this it will be $140 – at which point air fares start to skyrocket and flights get canceled left, right and center. If it reaches $200 a barrel – and a lot of commentators think it will – then the whole tourism industry will have to be rethought.
Already it is biting.
Example: Lang Junxiong, owner of a small manufacturing company in Jinhua, Zhejiang province, said he used to fly to Europe five or six times a year to meet buyers or attend trade fairs. He said, ‘However, since the beginning of this year, I have been talking to my customers mainly on the phone to save money.’
American Express Business Travel predicted that corporations will continue to be challenged to find new ways to keep travel budgets in check They will do this by cutting back on travel.
A recent report by American Express said oil price hikes was one of the main factors hitting business travel.
Summer time used to be the busiest season for Yang Hongchang, supervisor of Shanghai Airlines Holiday Tours (SHAT) international ticketing. But this year, he has spent most of his time explaining to clients the reason for the increase in airfares.
Airlines seem to be taking the major hit. Fuel costs usually account for 40 percent of their total operating expenses.
Transportation industry analyst Yao Jun, from China Merchants Securities, said, ‘Their domestic airlines net profit probably will be trimmed by 15 to 20% due the oil price rises.’
In truth, it will be much worse than that.
Source: China Daily