Photos: T. Ayuga
PETROL prices in the Balearics hit one euro a litre yesterday as oil prices vaulted to a 21-year high yesterday with U.S. light crude touching $41.45 a barrel, an all-time high.
The Confederation of Balearics Businesses tried to play down the runaway price of fuel yesterday, claiming that it will not hit tourism this year.
However, the alarm bells are ringing in the holiday industry, with airlines warning that flight prices will go up from Monday, unless fuel prices start to ballance out. Travel agents warned that, if airlines are going to pass the costs over to the consumer, then the Balearics will not have a good summer season. Spanair, for example, announced an increase in flight prices yesterday, a move which was not welcomed by travel agents, tour operators and consumer groups.
Airlines are set to put their fares up by between three and six percent and, in turn, the cost of a package holiday will also increase by three to six percent.
This could not have come at a worse time, Jaume Bauza, president of the Balearic Association of Travel Agents said yesterday. Just when the tourist season is about to start.
However, record high fuel prices will hit all consumers where it hurts most, in the pocket.
Recently, the average price of a litre of unleaded was around 89.6 cents.
Apart from the record costs of running a vehicle, the majority of goods in the Balearics have to be transported from the mainland and an increase in merchant transport costs of between three and six percent, will lead to a subsequent increase in prices on the high street.
Consumers are still complaining about the negative impact the single currency has had on their spending power, coupled with the runaway cost of living over the past five years. The decline in revenue from tourism, should fuel prices remain at top dollar for the mid or short term, means consumers will be forced to tighten their belts even further.
But, fuel prices are rising all across Europe. In the UK there are real fears that petrol will hit one pound a litre, denting consumer confidence which in turn could lead to a drop in holiday sales.
British Airways, for example, has introduced a fuel surcharge and some of the low cost airlines are terrified about the implications of the forecast price war.
Yesterday a sudden surge in summer holiday sales was reported after an unusually slow April, but it may run out of fuel should petrol prices continue to rise.
Tour operators face a similar situation in Germany where the travel industry is set for a recovery.
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