Era of cheap flights is over says BA boss as price of oil soars

Grim warning: BA boss Willie Walsh in the U.S. this week, where he said airlines would have to pass rising oil prices on to their passengers

He predicted that the death-knell would sound for smaller no-frills budget airlines, led by the likes of Ryanair and easyJet, which have boomed with headline-grabbing cut-price deals as low as £1 plus taxes.

Passenger groups fear travellers will increasingly be hit with extra charges - such as paying for luggage, paying to check-in, paying for seat reservations and paying for in-flight meals, as is already happening on some airlines.

For millions of Britons, it could spell the end of popular cheap weekend city breaks to places such as Barcelona, Prague or Turin.

Asked if the market of 'crazy' £35 ticket prices for weekend breaks was coming to an end, Mr Walsh said: 'My view is yes. I don't think the industry can absorb the significant increases (in fuel costs). The industry has no future if it doesn't price in its costs. This is about survival.

'The era of very low fares is behind us. It is clear that there are many airlines out there which are struggling today to survive.'

Speaking in Houston, Texas, the BA chief executive said a lot of airlines would ground planes and axe services.

'We are going to see more airlines fail and that will take capacity out,' he said. 'I think at some point demand will be affected by the increased prices.'

As if to underline the deepening crisis, shares in British-based business airline Silverjet were suspended yesterday as a promised £12million cash bailout stalled.

Business class only airlines Maxjet and EOS have already gone bust, along with London to Hong Kong budget carrier Oasis.

Mr Walsh has confirmed that as well as raising its fares, BA will cut thousands of flights this winter as it drops less profitable routes. He also declined to rule out an increase in fuel surcharges.

'It could be (a rise in fares), it could be surcharges or it could be a combination of both,' he said.

His comments came as the price of crude oil this week reached a new record high above $135 a barrel.

Motorists are being hit with record prices at the pumps and fuel protesters plan action in London on Tuesday.

The soaring oil price raised the prospect of a £700-a-year rise in fuel bills for the average family.

The Government has admitted that Britain is in the grip of an economic crisis. Trade minister Baroness Vadera said on Thursday that the nation is facing a 'very testing period'.

Business leaders warned that companies are being pushed 'to the absolute edge'.

BA last week unveiled record annual profits of £883million, but analysts warned that the soaring cost of fuel could wipe out profits this year. Its fuel bill topped
£2.1billion last year and is likely to hit £3billion this year - accounting for more than a
quarter of its total costs.

Earlier this month, BA boosted its fuel surcharges. The highest rise of £30, applying to long-haul flights of more than nine hours, rocketed from £128 to £158 for a return trip.

Mr Walsh said families will also be hit hard when the Government introduces its controversial new cash-raising 'green' tax on airline flights from November next year.

He said it will add £500 to a family holiday, but is designed to swell Treasury coffers rather than save the planet.

American Airlines is to be the first major scheduled airline to charge passengers for baggage. It is imposing a £7.50 each-way charge for the first item and £12.50 each way for a second, with a third bag possibly costing £50 on domestic U.S. routes.