The head of one of the world's biggest airline alliances, oneworld, whose members include BA and Qantas, said the group will consider changing membership rules in order to allow budget airline-style charges.
"If the industry moves to a standard of charging for an apple juice in economy, the alliance will move in that direction," said John McCulloch, oneworld's managing partner. Asked if bag check-in charges are also on the horizon, he added: "Airlines would argue that it's the right way to do it. It's £20 a bag, £10 for a meal. We are going to see much more of that."
Add-on fees for stowing bags and refreshments are a staple of the budget carrier industry, but long-established airlines have refused to levy such charges in case they lose out to competitors.
Echoing the comments of BA boss Willie Walsh last month, he said fares will also have to rise if carriers are going to stay in business. With oil trading at $130 a barrel, the vast majority of airlines including BA are technically unprofitable. BA and Virgin Atlantic have hiked fuel surcharges over the past week in a bid to cover their costs.
"It is unsustainable. Airlines are going to have to find some way of combating this fuel price, whether it's increasing fares or cutting costs, because the business is unsustainable today." He added: "People have realise that it's going to get more expensive to travel."
Silverjet, the Luton-based transatlantic carrier, became the latest airline to enter administration due to financial problems last week, joining eight US airlines and two carriers that operated flights from the UK: Nationwide Airlines and Oasis Hong Kong Airlines. BA, Qantas and Air France-KLM have all warned in recent weeks that fares will have to rise, but McCulloch warned that consumers might refuse to travel, and plunge carriers into further trouble, if ticket prices rise too far.
"Fares have to rise to a realistic level to reflect the fuel price. Whether that can happen without the industry breaking up is the key question."
McCulloch, apeaking at the annual general meeting of the International Air Transport Association in Istanbul, added that the 10 oneworld airlines, which include Hong Kong-based Cathay Pacific, Spain's Iberia and the world's largest carrier, American Airlines, will have to cooperate more closely on buying fuel. Fuel accounts for around a third of airline budgets and that proportion is rising, with the price of jet fuel rising by 50% since January alone. McCulloch admitted that regulatory authorities in Australia, the US and Europe will watch the talks closely, but the industry has no choice other than to work harder on reducing costs together.
"We have got a procurement group and we have got to be a little more aggressive. With fuel at its current price, it's not acceptable that we cannot work together to make some savings. The irony is that the people selling it [the Opec group] are allowed to sell together. But we will be looking at making sure we don't go to jail," he said.
McCulloch added that ownership laws, which restrict foreign carriers to 25% of the shares in US airlines and in the European Union to 49%, will have to change as airline industry focuses on mere survival over the next year. Unions will also have to give concessions, he said. Two major US carriers, United Airlines and Delta, have dropped merger talks due to union concerns and American Airlines and close rival Continental have also cooled discussions.
"We are structured in a way that, one could argue, adds unnecessary cost. There are attitudes towards ownership and labour that are historical and unsustainable," he said, adding that setting up an airline at Heathrow airport now faces significant obstacles due to trade union
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