Sir Tim Clark, the president of Emirates Airline, has developed a bit of a reputation for saying what the public thinks – and then acting upon it. Last summer, he was the first major airline boss to call for changes to flight routes over conflict zones, responding to the rise of ISIL in Iraq and Syria and the shooting down of Malaysia Airlines flight MH17 over Ukraine. In the days that followed, many airlines modified their routes.
Now Sir Tim has turned his attention to oil prices. Speaking in Davos, he said the airline was reviewing its fare structure to take account of the fall in oil prices.
The organisation, he said, would seek to pass on some of the savings to customers. This is something that passengers had been wondering since the oil price began its decline last year – and where Emirates leads, expect other airlines to follow.
The fall in the cost of oil is a bit of a mixed blessing for the Gulf region. On the one hand, as an oil-exporting region, the drop in the price of oil will mean less money flowing into government coffers. There will also possibly be a small effect on property prices.
On the other hand, citizens of many of Europe’s leading economies, along with those in the US and elsewhere, will have more money in their pockets and will likely use some of it to fly to the Gulf and holiday here. (Alas, the same is unlikely to be true for our Russian visitors.)
But airlines are only part of the story. Lower oil prices will, in time, also lower the overall cost of trade.
In those parts of the world that don’t produce oil – or, when it makes only a small contribution to GDP – the lower price will mean a generally lower cost of doing business.
Business should, in theory, be able to lower prices, helping exports. And consumers, with more money in their pockets, will spend more, possibly kick-starting a global economy that’s still slowly trying to shake off the damaging effects of the 2008 financial crisis.
A drop in the cost of flying, then, should be just the starting point, the herald of better times to come.
