The Wall Street Journal recently featured a story that dives into detail about the soaring costs of air travel and what it will mean for business and consumers. According to the article, at $135/barrel the average fuel cost per passenger for each round trip is $137.60. But the average domestic fare is estimated at only $263.00 today (over 50% of the cost of a ticket). Last year, when oil was hovering around $75 per barrel, the average fuel cost per round-trip ticket was 30%. And four years ago it was as low as 10%-20%. So what will happen as a result?
The article sums up the implications well: fewer flight options, much higher fares, less airport crowding, fewer delays, re-instatement of high level pre-flight & in-flight services. Or put simply, "jet travel may return to its early days as something more of a luxury to be consumed sparingly". This will have a huge impact not only on corporate travel budgets, but also on procurement, limiting the function's ability to conduct site visits to potential/new/existing suppliers, engage in supplier development activities and develop joint innovations -- unless, of course, these activities can be facilitated online.
- Jason Busch