Aviado Partners is interviewed by Bloomberg TV's Angie Lau on "First Up" on fuel prices and exchange rates
13 February 2015, Singapore
Aviado Partners Consulting GmbH Managing Director Shakeel Adam discusses the effects of low fuel prices and exchange rates with Angle Lau on “First Up.” (Source: Bloomberg)
Shakeel outlines that airlines which have been significantly hedged on fuel as unable to pass on reductions to passengers because they had locked in fuel prices for this year last summer when prices were higher. Those airlines which are able to pass on cost savings are the ones which can offset old hedges with new ones and those which have limited hedges. As such, customers should not expect significant savings from fuel surcharges this summer. However, as airline exposure to fuel hedges diminishes, these savings may be passed on to the market. However, Shakeel suggests airlines should seek to maintain some additional profit to stregnthen the sustainability of the industry rather than fully passing on savings.
More importantly, however, Shakeel outlines the risks facing airlines due to currency exposures. Shakeel outlined the strength of the USD relative to the Japanese Yen, Euro, and most other Asian currencies is putting significant revenue pressure on airlines with services to these regions. The strength of the Chinese RMB is providing some reprieve for airlines with extensive exposure to revenue from China.
Shakeel points out the need to not be too distracted by external pressures, reinforcing the need to focus on the airline's strengths as the core for the future. Understanding competition is important, but businesses should take care to not get too distracted by the real and perceived threats from competitors.
About Aviado-Partners Consulting GmbH
Aviado-Partners Consulting GmbH is a specialist management consulting firm providing objective, independent and evidence-based analysis, advice and implementation support to airlines, airports, rail operators, hotels and other transportation related companies around the world. The firm advises management, boards, investors, governments, leasing companies and other stakeholders across all the key commercial and strategy issues. Aviado Partners' team members and associates have worked with leading international full service and low cost airlines, global consulting firms, financial institutions and manufacturers both as members of senior management as well as an airline consultant. The Partners and Associates have led or had significant involvement in numerous merger, acquisition, restructuring, start-up, aircraft selection and performance improvement assignments in Asia, the United States, Canada, South America, Russia & the CIS, Africa and the Middle East.
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