The sharp rise in fuel prices will negate any fares cuts at Heathrow from Open Skies, Peter Spencer, managing director of bmi, said.
He said that some fares in some classes on transatlantic routes had dropped by 25%.
"They have come down in business class but I can't see how they can come down any further in economy," Mr Spencer said. But he said that fuel had gone up in recent months by 30% and it was also 30% of an airline's costs. "This is going to have an impact on their yields. Airlines can't afford to take these massive costs. "Fares just have to go up which will negate the nirvana that people thought they would get out of Open Skies," he said.
Mr Spencer was speaking at the annual conference of the Institute of Travel Management (ITM) of the UK and Ireland in Dublin. He said the first stage of the Open Skies deal between the EC and the US, which came into force at the end of last month, was really about opening up London Heathrow. The second stage, on which talks would start next month, was about ownership and control of US-based carriers by foreigners and also about cabotage – the right for non-US carriers to fly domestic routes in America as US carriers can within the EC.
Mr Spencer said the Open Skies deal was about free and fair competition. "That is why there are two stages to it and the US must acknowledge that the second stage is as important as the first," he said.
He said the deal would create competition and "make sure that nobody rips off the customer."
More than 500 delegates gathered at the Crowne Plaza Hotel at Dublin Airport for the three day conference which started yesterday (April 16). Mr Spencer was speaking at a session which dealt with pan-European issues which affect business travel. The other two were the conduct of the International Air Transport Association (IATA) and the proposed de-regulation of CRSs in Europe.
IATA is a "price-fixing cartel", Mike Platt, industry affairs director for HRG, told the session. He said its "antiquated" rules had been fixed when it was formed in the 1940s and not changed much since.
"There is no appeal against what they do and their decisions are costing us money," he said.
He cited the current move by IATA to change the remittance time for payment on airline tickets from one month to one week as "scary."
"It is going to happen first in Scandinavia and then it will happen in Germany and Austria," Mr Platt said.
He said agents were incurring costs of up to 15% more than they needed to because IATA would not allow them to set up the global progammes they wanted.
"Someone has to say 'Excuse me but we are sitting there with an antiquated rule book which you will not change'," he said. "The only weapon we have, the only one with any power, is the EU. It has received complaints about IATA and followed them through. "But IATA gets conciliatory but as soon as backs are turned, they carry on as before. "We have failed to get changes because they have the hide of Teflon. Problems just get moved around. “To get changes we have to get organisations like the ITM and Paragon involved."
Kevin Mitchell, chairman of the Business Travel Coalition, said the whole issue over de-regulation of CRSs in Europe was about transparency. He said agents using the CRSs wanted access to all airlines' inventories and to know that the price was the best they could get.
He said countries where an airline and a CRS in which the airline had a stake were both dominant were prone to possible abuse. He said it would happen little by little. For example an agent might find he was unable to get the airline's full inventory on other CRSs forcing him to switch to the CRS in which the airline had a stake.
Mr Mitchell said the CRSs were essential to business travel with more than 80% of bookings in some markets made through them.