Ian Douglas

even though you may have sold tickets to somebody weeks or even months ago when the cost of operation was much lower.

So the airlines are at this point still carrying people who bought tickets earlier and at the same time are already paying out much higher fuel prices and it will have made some operations that were previously profitable marginal, some that were previously marginal unprofitable and that will start to reflect in schedules and what's available to buy.

We were giving some advice to friends recently.

Should we book now or book later?

And my advice is usually, you know, if you see an airfare you like, book now.

Something they had been looking at at, I think, $5,000 turned out at $8,000 by the time they decided they really wanted to book because the prices had gone up, the demand had filtered onto fewer flights and the pricing had reflected that.

It does, and in preparing to talk to you, I had a look at some of the other feedback.

Not all of it is quite that dire, and the Europeans do have a process for sharing fuel around to make sure that one hub airport doesn't suddenly run out.

But there have definitely been cancellations.

Lufthansa in Germany announced yesterday about 20,000 flight cancellations over the upcoming European summer.

Most of them short haul flights within Europe, some of them flights that had become unprofitable at the high fuel prices.

Qantas announced a 5% reduction, Virgin a smaller reduction.

And some of that can come out of city pairs like Melbourne, Sydney, Sydney, Brisbane.

You almost wouldn't notice it.

There's so much frequency on some of those routes.

If a few flights were taken out, it would be almost invisible to the consumer.

And when the airfares have gone up to reflect the higher fuel price, that will already suppress demand a little bit.

So I don't see it having much of an impact on the major routes in Australia.

It becomes more impactful on thinner markets where it may no longer be

commercially viable to operate some regional services and we saw that for example on Mount Gambier.