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Cheaper oil means lower air fares says IATA

Cheaper oil means lower air fares says IATA
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Falling oil prices will mean cheaper tickets for air travellers according to the International Air Transport Association (IATA).

The amount that airlines spend on fuel will drop to around 155 billion euros next year from an expected 164 billion this year, IATA said.

It is talking about a five percent reduction in ticket prices, though that does not include taxes and surcharges.

Crude oil has fallen by 40 percent since June, but IATA pointed out the airlines cannot cut more as they are locked in to fuel contracts that pre-date the recent price slump.

Cargo rates are expected to fall by close to six percent.

IATA said global airlines are set to report their strongest profit margin in more than five years in 2015.

“The industry outlook is improving. The global economy continues to recover and the fall in oil prices should strengthen the upturn next year,” IATA Director General Tony Tyler said.