TAP increases travel ticket prices by up to 50 euros

Transportes Aéreos Portugueses (TAP) recently announced an increase in travel ticket prices due to jet fuel hikes. The surcharge will range between three and 25 euros for one-way travel and between six and 50 euros for round-trip travel.

TAP's CEO pointed to the Russian-Ukrainian war as the main factor driving up prices. And, despite the uncertainty in the future dimension of its impact, more severe times are expected

"Fuel prices are increasing and analysts expect an extreme impact. We have to be prepared and so ticket prices have to go up," Christine Ourmières-Widener justified, using British Airways or Latam as examples.

The increases will vary depending on the regions, routes and ticket class. It will be higher on long-haul flights, where there is greater fuel consumption.

In the statement quoted by ECO, the company states that it intends to continue to maintain its competitive strength, so it will always take the most appropriate pricing measures for each moment and on each specific route.

The price of jet fuel has soared on the markets, following the escalating price of oil. According to data from the International Air Transport Association (IATA), the average value of fuel used in aircraft is $112.5 per barrel this year, 45% more than in 2021. That represents an overcost to the industry of $82.1 billion.

To defend themselves against a rise in jet fuel prices, airlines make financial hedging contracts, which in practice allow them to fix the price they pay for fuel over a given period. As ECO reported, TAP made hedging contracts for half of the jet fuel it expected to consume in the first half of the year.

The CEO of the carrier revealed today that the company is already doing the same for the second half of the year.

"We are starting hedging for the third and fourth quarters. We want to reach a 50% hedge, similar to the first half, but it will depend on the price of jet fuel," said Christine Ourmières-Widener.

TAP will restore around 90% of the capacity it offered before the pandemic in the IATA summer, which begins on 27 March, "with the expectation that demand will accompany this increase in supply". This reinforcement has already led the company to suspend the reduction in crew schedules and announce the reintegration of workers who were covered by the program of departures in 2020.

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