Exchange rate volatility restricts airfare discounts

Published 25.06.2015 22:05

Commenting on the fact that airfares have not declined despite falling oil prices, Murat Ersoy, the CEO of Atlas Global, said, "Our expenditures are on a dollar basis; our income is on Turkish lira basis." "The price of fuel oil has dropped; the exchange rate of dollar has risen." The maximum airfare will not change unless the exchange rate is TL 3 ($1.1), he added. The 25 percent fall in oil prices on the Turkish lira basis within a year had created a hope for a reduction in airfares. However, this fall did not lead to a reduction with airfares rising by 1 percent in the recent period. Attributing this situation to dollar-indexed expenditures and Turkish lira-indexed income in the aviation sector, Ersoy said that airfares were $140 when maximum pricing was launched; however, they have dropped down to $115 now. As oil prices have started to rise, we do not need to increase the maximum price until the exchange rate of the dollar rises to TL 3, he said.

Share on Facebook Share on Twitter