IAG CEO Willie Walsh has warned passengers not to expect any benefits from a drop in oil prices currently being enjoyed by the airline industry.
Oil prices have slumped in the past year from $100 a barrel to around $60 a barrel at the end of 2014.
There has been calls for airlines to pass savings onto passengers and at the start of the year IATA predicted fares will drop 5 per cent in 2015 due to the fall.
However, speaking as IAG published it full year annual results yesterday, Walsh said the oil price drop has been "broadly positive" for the company but passengers shouldn't bank on being reflected in ticket prices or other benefits such as aircraft improvements.
"We will continue to offer customers great value for money, but that does not mean we will automatically pass on all the benefit we get because some of that return must go to shareholders who have supported us through tougher times and a period of significant investment in new aircraft," said Walsh.
"It is, we think, unlikely that airlines will use the excuse of lower prices to extend the life of old aircraft or to bring grounded planes back into service, not least because of the significant maintenance costs that it would involve. Nor do we see any evidence of carriers throwing huge amounts of extra capacity onto the market, as they have done in the past.
"The current sharp dip in prices is likely to be relatively short-lived and we must continue to control costs and capacity," he added.
IAG's results showed Walsh's salary rose 28 per cent last year to £6.4 million, including benefits, following a strong year from the group. The British Airways owner reported pre-tax profits of €828 million for the year ending December 31, from €227 million the previous year. This included a return to profit for Spanish airline Iberia.
Open skies
Walsh warned a "worrying" rise in protectionism is threatening the Open Skies arrangement, which calls for the liberalisation of the rules and regulations of the international aviation industry.
“We set up IAG with the express purpose of playing a lead role in
the consolidation of our industry,” he said.
“Consolidation remains mostly focused within geographic regions and is likely to remain that way while ownership controls in some markets remain in place.
“We are a long way from the fully deregulated global industry I would like to see. It is also worrying to see protectionism rearing its head again, notably in the US where some carriers complain the open skies arrangements are benefitting non-US airlines, most particularly the Gulf carriers," Walsh said.
Last month, IAG launched a €1.36bn takeover bid for Irish airline Aer Lingus, but it gave no further details on the progress of the takeover in its results statement.
The Irish government, which holds a 25% stake in Aer Lingus, is believed to have concerns over the deal and trades unions have warned over jobs cuts.