By Glorious Sefako Musi
JOHANNESBURG, Jan 14 — The weak South African Rand is off-setting the benefits that airlines in the country are expected to gain from the drop in the price of oil.
Airlines say the weak rand is working against them as most of their operating costs are US dollar-based.
Many airlines have struggled to keep flying in recent years as oil prices soared. A year ago, the price of Brent crude was around 110 USD a barrel, but has since dropped by some 56 per cent.
Although the relief is welcomed by many, airlines say it will take time to see the benefits trickle down. Some airline companies are locked in long-term jet fuel supply contracts and for South African airlines the weak rand is also the enemy.
New low-cost carrier Flysafair says it buys jet fuel in the open market as it is not locked into a long-term supply contract and this has helped it reap the benefits of the low oil prices. However, its operational costs remain high.
The price of Brent crude oil has dropped below 46 USD a barrel and is expected to continue its downward trend in the short term.