Air France CEO stays upbeat on summer amid global turmoil

Russia’s invasion of Ukraine so far has not dented summer demand for travel between North America and Europe, despite fears soon after Russia’s invasion of its neighbor last month that Europe’s recovering tourism industry could suffer from the fallout, Air France CEO Anne Rigail said at the Skift Forum Europe in London on March 24. “At the beginning of the war, bookings were paralyzed for a few days,” Rigail said at the event. “We were wondering if [American] passengers would fear coming to Europe because of the war, but we have not seen this,” she said, adding that booking momentum for summer travel has picked back up. But that isn’t to say the French flag carrier has not been affected by the war, which broke out on Feb. 24, when Russia invaded Ukraine. Fuel prices are rising, and Air France will have to raise fares this summer. Economy-class fares on roundtrip flights to North America could rise by $33, and in business class by $110, she said. “It will hurt for sure,” Rigail said. The fare increases will come despite Air France having hedged — or insured itself — much of its energy costs. Fuel typically is an airline’s second-largest expense, after labor. Unlike most US airlines, European carriers hedge much of their fuel costs. Air France has hedged more than 70 percent of its fuel costs for Q1 and Q2, which takes the sting out of rapidly rising oil prices, which soared past $100 per barrel for the first time since 2014 in the immediate aftermath of Russia’s invasion. Although oil prices have retreated from their high of close to $130 per barrel in late February, the price of industry benchmark Brent crude remains at $112 per barrel as of March 24. Hedging “won’t be enough to avoid” raising fares, Rigail said. Story has more.<br/>