Price escalation is inevitable: TAP Air
TAP Air Portugal is the state-owned flag carrier of Portugal, a member of the Star Alliance since 2005 and operates on average 2,500 flights a week to 90 destinations in 34 countries worldwide. Popular for US inbound and outbound flights into Europe and price competitive, the airline, like any other major airline in the world right now, is upping its fuel tax.
In line with other major airlines, TAP Air Portugal will increase the YQ charge – fuel tax – due to the escalating price of jet fuel, one of the main cost factors in aviation. Some analysts predict for the aviation sector an extreme impact caused by this brutal fuel increase, but it is believed that, in the long term, the situation could stabilise. However, in the short term, it is inevitable that travel prices will rise.
“In our industry, nothing is short term. Most of the big investment, be it fleet or infrastructure, when you push that button, most of the time, you cannot go back”
– Christine Ourmières-Widener
We speak to Christine Ourmières-Widener, CEO at TAP Group and Non-Executive Director, who is visiting Dubai in the last few weeks of Expo 2020 Dubai. She says, “Prices will always have to maintain the right balance, so they don´t reduce demand for travel, while assuring at the same time the sustainability of the flights operated by the airline.
“TAP wants to maintain its competitiveness and will continue to monitor the situation on an ongoing basis and will take the most appropriate measures for each moment and on each specific route regarding pricing. This IATA summer, TAP will restore around 90 per cent of the capacity it offered before the pandemic with the expectation that demand will accompany this increase in supply.
“At the end of the day, it's about not only prices, but also your cost, delaying some investment, if it's possible. Not spending because that's the best way to save costs.
“On a positive note, we are more agile than before and more flexible. But the big negative is the uncertainty. Also taking risk on some investments, because in our industry, nothing is short term. Most of the big investment be it fleet or infrastructure, when you push that button, most of the time, you cannot go back.”
The pandemic saw TAP focus its resources on the cargo business and it continues to find that part of the business quite successful. “We think that there is definitely a potential there and Portugal is well located, from a distance perspective, we are in the western part of Europe. For cargo distances are critical because it's about costs. At the same time cargo made sense because some destinations were closed.
“We had to think about new destinations and more leisure destinations because business because business travel had not come back. We opened Punta Cana in Dominican Republic and Cancun in Mexico and it's been working perfectly. The destination are very popular. That's why we have kept them for this year.”
Late last year, Tap Air and Emirates expanded their codeshare partnership with the addition of 23 more destinations, bringing the total number of connections to more than 90 points.
“I'm a very positive person because life is too short to be negative. Even if we are very aware of the challenges, during a crisis you need to test new ways to work. Teams have been learning to act differently, constantly reviewing and anticipating. This will be something very positive for the industry moving forward.”