Higher airfares on the horizon?

Analysts at RBS say a US$10- increase in the price of a barrel of fuel will likely reduce airlines' operating profits by between 20 and 28 per cent. Fuel expenses account for up to 40 per cent of operating costs for some carriers.

And a further rise in oil prices could mean higher fares and surcharges for passengers, especially those travelling for leisure.

Analysts also expect that if the political crisis in the Middle East and North Africa deepens, more carriers will consider hedging their exposure to oil prices.

ORIGINAL SOURCE