Looks like you'll need to pack your bags now... or forever hold your travel bug.
Background: The US and Europe did what they said they would, and slapped an embargo on Russian oil exports. And because Russia is such a big exporter of oil... this has had a massive effect on supply.
What happened: Now, crude oil prices are up to around $180 a barrel. That's a 13-year high. Qantas chief Alan Joyce is saying the average airfare could go up by around 7% as a result.
What else: Things should stay relatively stable in the short-term over at Qantas HQ thanks to oil hedging.
💡Airlines protect themselves from sudden fuel price increases (like we're seeing now), by doing a 'lil something called oil hedging.
💡Fuel generally accounts for about a quarter of an airline's total costs. So, airlines enter into oil hedging contracts to reduce the impact of future fuel price rises on their bottom line.
💡Airlines buy up current oil contracts to lock in today's fuel price - kinda like what we can do with the 7-11 Fuel Price lock. That way, even if fuel prices go up...the airline is still only paying today's prices.
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