Looking Ahead In 2015: Oil Prices, Elections, and Private Aviation
The start of a new year is here and we are looking forward to what 2015 has to offer with interest. Already there are several themes emerging that we feel will have a noticeable impact upon our markets.
Oil prices have been falling steadily as the volume of shale gas coming on stream increases. Whilst OPEC countries maintain current production levels, it is unlikely that prices will rebound any time soon, with the price of Brent crude slipping beneath $50 per barrel this week for the first time since May 2009. This should have a noticeable effect on fuel prices – already George Osborne has hinted he expects savings to be passed on to UK motorists, and equally we have now seen the first private jet charter company in the US cutting fees on flights owing to cheaper fuel costs. This should be something that we see more of as the first half of the year progresses.
In Europe, problems are persisting within the Eurozone as uncertainty continues. Question marks over Greece’s commitment to its monetary obligations, driven by comments from the poll-leading Syriza party, have caused the Euro to weaken substantially against both the pound and the dollar. Although a snap poll this month should calm nerves if the governing coalition lead by the New Democracy party win the election, there will remain continued fears of a ‘Brexit’, the question of which will not be laid to rest until after the General Election on May 7th. With the ‘wrong result’, both events have the potential to cause major upheaval in currency markets, which in turn will inevitably have a bearing on the demand for business aviation seen across the continent, particularly during the traditionally busy summer.
With interest rates still at historic lows making it cheaper to loan and lease aircraft, the continued strength of markets in the middle east and growth in the far east – noticeably China, which some are predicting will see 10-15% growth in the sector, and latent demand in other large economies such as Brazil, there is every reason to believe that despite a few localised difficulties the industry looks set for another busy year.