Airfares are likely to skyrocket in the coming weeks and months as Russia’s invasion of Ukraine sends global oil prices soaring.
Russia is the world’s third largest oil supplier, accounting for 11 percent of total supply, but the United States and Britain have already announced boycotts.
Ukrainian President Volodymyr Zelenskyy has called on other countries to follow suit, while the Russian president has threatened to shut down his country’s Nord gas pipeline, which would further restrict supplies.
While Australia gets most of its oil from Southeast Asia, this supply shortage is pushing oil prices up globally, hitting more than $120 a barrel this week.
Airfares could rise by as much as 15 percent amid Russian invasion of Ukraine (file image)
After two years of domestic and international border closures, it doesn’t look like things are going smoothly for international travel (Photo: Passengers at Sydney Airport in 2021)
On Tuesday, Qantas CEO Alan Joyce warned of a 7 percent rate increase for his airline, with a further 1 percent increase for every $4 price hike.
Some experts predict that oil prices could reach $200 a barrel as the United States, the world’s largest oil supplier, struggles to cover the shortfall.
Flight Center CEO Graham Turner said on Wednesday that airfares — which are already significantly higher than pre-Covid prices — could see a further increase of up to 15 percent if this happens.
“My guess is that with the airline’s increasing capacity, we’ll have to go back to pre-Covid international airfare in the next six months, but fuel costs could put 10-15 percent off an airfare,” said Mr Turner. the Australian.
“I don’t think the cost will be a big deterrent, but the situation in Ukraine is. When things calm down, travel will increase, but when things get worse, people will be more reluctant to travel. If the situation remains the same, people will get used to it and still travel.’ he said.
The United States and Britain have issued boycotts on Russian oil, pushing up world prices (file image)
The Russian invasion of Ukraine on February 24 sparked a wave of heavy sanctions from Western governments (Photo: Russian tanks in Kiev)
Mr Turner said most Australian tourism and flight operators had become accustomed to disruptions over the past two years and were resilient.
He said the industry must or the storm as long as the conflict does not spread to a wider Europe.
Mr. Turner, 73, added that he plans to stay on as CEO of Flight Center for the next five years.
The company has closed 600 stores and reduced staff by 14,000 since 2019, but hopes to return to profitability in the second half of this year with the borders now open.
Australian Prime Minister Scott Morrison has insisted that sanctions against Russia should be maintained for the long term, regardless of a ceasefire.
Morrison told the international policy think tank Lowy Institute earlier this week that Russia must pay the economic and diplomatic price for its aggression.
“All Western countries, all those who participate in these sanctions, must stand and persevere for the long term,” Morrison said.
“An eventual interruption of the fighting should not lead to an easing of pressure or vice when it comes to Russia.”
Hundreds of locals fled Irpin in northern Kiev amid Russian bombing on Wednesday (pictured)
There are an estimated 1.5 million refugees who have fled Ukraine since the invasion (Photo: People queue to fetch water in Mariupol, Ukraine)
The Russian economy is in free fall after coordinated, severe sanctions by Western governments and rafts of international companies and commodities players withdrawing from the country.
One of the world’s largest oil companies on Tuesday apologized for previous purchases of Russian oil, including heavily discounted shares after the Russian invasion.
Shell CEO Ben van Beurden apologized for last week’s crude purchases after Ukrainian Foreign Minister Dmytro Kuleba asked the company “if it smelled like Ukrainian blood.”
Mr Van Beurden said any profits from that oil would be donated to provide humanitarian aid during the Ukraine crisis.
“We are well aware that our decision last week to buy a shipment of Russian crude oil to be refined into products such as petrol and diesel … was not the right one and we are sorry,” he said in a statement. declaration.
Shell apologized on Tuesday after buying Russian oil at a discount last week
Ukrainian President Volodymyr Zelenskyy has urged all Western countries to boycott Russian goods, including oil (pictured Wednesday)
Australia has provided humanitarian aid and prioritized visas to those who have escaped the conflict.
An estimated 1.5 million refugees have fled Ukraine since Russia invaded on February 24.
On Wednesday, hundreds of Ukrainians living in towns occupied by Russian troops on the outskirts of Kiev fled amid bombing raids by Russian troops.
Streams of cars, some secured with white flags, poured onto the road, along with rows of yellow buses marked with red crosses.
The Interior Ministry said about 700 people were evacuated from Vorzel and Irpin. People from three other Kiev suburbs were unable to leave. Some who managed to get out said they hadn’t eaten in days.