“Airlines face an existential challenge,” said
Rigas Doganis, who once headed Greece’s former national carrier, Olympic Airways and served as a director of Britain’s easyJet.
“They will need to cut fares to stimulate weakening demand while higher fuel costs will be pushing them to increase fares. A perfect storm,” said
Doganis, who now chairs London-based consultancy firm
Airline Management Group.
Global airlines have begun to hike fares and cut capacity to cope with the sudden surge in the oil price, but the industry’s ability to remain profitable may depend on whether consumers pull back on flying as gasoline costs threaten household budgets.