Airlines may benefit from lower oil prices
Airlines are benefiting from considerably lower oil prices than a year ago. Photo: Bogi Sævarsson
It is too early to assess the long-term effects of lower oil prices on tourism, according to Halldór B. Þorbergsson, Senior Vice President for Business Development at Icelandair Group. Prices have halved in just under a year, falling from $110 to 55$ a barrel.
If prices remain at these levels, the Icelandic economy could save up to ISK 40 billion (approx. €269 million) a year, according to calculations by Landsbanki. This is the equivalent of 250,000 extra tourists visiting Iceland every year.
Keeping inflation down
At a meeting held this morning at Landsbanki, the effects of lower oil prices were discussed in the context of higher economic growth in Iceland. Daníel Svavarsson, Director of the Economics Division of Landbanki, pointed out that inflation in Iceland would be around one percentage point higher if it were not for lower oil prices. This has a knock-on effect on the costs incurred by companies, including airlines. The effects of the huge growth currently being experienced in the aviation sector are being felt throughout Icelandair Group, says Þorbergsson.
Prices rising at the pump
However, as reported in Morgunblaðið yesterday, prices at the petrol pump have recently risen again.
Prices at the petrol pump are still sensitive to fluctuation in production worldwide. Photo: AFP
