The new year has started with a bang. World stock markets are hitting record highs and the price of oil is back to 2015 levels.
Do higher fuel prices automatically mean higher fares and higher corporate travel costs?
Many factors affect the demand, supply and price of business travel. Fuel may be the largest external airline cost and might be blamed for higher fares but the price of oil is unlikely to be the biggest reason for fare hikes.
As the price of fuel can escalate sharply and unpredictably, many companies practise hedging, ie they buy large volumes at different set times and prices to ensure supply at a given price to protect themselves from market volatility. The escalating price of oil is certainly adding pressure to carriers but there are other influences that are less easy to manage.
Capacity and geopolitics can have huge effects on both demand and supply.
Relative capacity — supply — on a route will affect pricing. If a carrier launches a new route, complete with introductory offers, those already flying the route are likely to be eager to offer discounts to protect their market share.
Capacity can also fall. According to a recent piece in the Financial Times, the untrammelled growth of the Gulf carriers is over. It quotes figures from consultancy Flight Ascend: "For Emirates, annual growth in scheduled seats departing from Dubai has averaged 11 per cent between 2012 and 2016, while at Etihad and Qatar, from Abu Dhabi and Doha respectively, they increased 14.6 per cent a year and 16.2 per cent a year over the same period. According to current schedules for 2017, the average annual increase in seats for the UAE carriers will now be 2 per cent and 3 per cent respectively over 2016, and Qatar Airways will drop 1 per cent."
Airlines, especially the Gulf carriers, rushed to put large capacity aircraft such as A380s on the long-haul routes to Asia. Load factors no longer justify this so these aircraft are being withdrawn.
Drops in the price of oil also mean that international business is not as buoyant as it once was in the Gulf. The consequence has been less business travel to some destinations in the region.
The use of Gulf carriers with their superior products and competitive fares had always been considered immune from the effects of any local market vagaries for flights between Asia, Europe and North America.
They were immune until geopolitical volatility precipitated extra barriers to journeys.
The Trump Administration's introduction of policies such as more traveller checks and threatened laptop bans have taken a toll. American thinking towards travellers from certain countries can explain the disenchantment with Gulf carriers as much as the oil market.
In addition a diplomatic row between Qatar and its neighbours over Qatari support of the Muslim Brotherhood has added time to flights on Qatar Airways because they are now prohibited from using neighbouring countries' air space.
Security is another geopolitical thorn. Every time there is a terrorist incident, the volume of travel, even business travel, falls.
The GBTA has forecast overall growth in business travel spend of 6.1% - that figure is likely to mask wide variations among regions, industry sectors and time of year.
So much other than the price of fuel, especially capacity, can affect fares.