While airlines could face cost pressures, oil price rises could reignite investment in oil and gas exploration and boost corporate travel

20 February, 2018

Airlines have been enjoying a period of low oil prices, but rates are on the rise and expected to continue moving upwards in the year ahead. Although we are unlikely to see prices hit the highs seen earlier this decade, they will still have a significant impact on the profitability of the airline sector and will influence decision-making, especially when it comes to future investments.

For some specific cities and regions of the world, the rising cost of fuel could deliver a major boost for corporate travel, as highlighted by Wings Travel Management, which specialises in oil and gas-related travel as well as full-service corporate travel. Wings, like many others, forecasts that barring any major disruptive geopolitical influences, oil prices will continue to climb steadily in 2018.

As a specialist travel provider says such a move “would reignite investment in oil and gas exploration,” which energy clients put on hold at the start of the energy sector downturn in 2014. As a result, it anticipates travel spend by oil and gas clients to increase by 2019.

This will not be more evidently seen than across Africa and could lead to an increase in business travel across the Continent. “Unprofitable rigs will now become more profitable in areas like West Coast Africa, where knock on effects impact travel positively,” says Frank Palapies, chief operating officer for Africa and the Middle East at Wings Travel Management. “Oil and Gas also has a ripple effect to the corporate travel sector specifically in associated and related industries, as was evidently seen in 2014.”

Wings notes that keeping a close eye on travel costs, looking for efficiencies in procurement, managing travel costs and ways for staff to travel most effectively, will also be a top priority in the African region during 2018 to deliver on any oil price fillip. But, it warns that an even greater focus on traveller safety, not only due to the ongoing threat of terrorism, but also geopolitical instability will add to the complexities of travel in 2018.

Personal safety and duty of care will be top priorities for companies, but this is something that has been in the mindset of travel providers, employers and staff working within the energy sector for decades. “It goes without saying that safety will still be a priority given the nature of the destinations that energy sector companies are sending their travellers to,” says Mr Palapies. “That includes airline safety, ground transport, transfers and the associated risks. Travellers want to get in and out as quickly and safely as possible.”

Founded in 1992, Wings’ global reach has grown from humble beginnings with one office in Johannesburg, to become a USD325 million global provider of travel and support services, headquartered in London, with 16 wholly owned and managed operations in North America, South America, UK/Europe, Africa, Middle East and Asia. Last year , its 25th anniversary, it established operations in Mozambique to support growing energy travel needs into the southern African country following the discovery of some 85 trillion cubic feet of gas reserves, said to be the most significant find in a decade.

Managing complex travel and logistics for corporates in the energy, marine, construction, engineering, security and financial sectors, where travel is an integral part of their business means that travel risk management has to lie at the heart of travel management due to the nature of the business and the type of destinations where they are travelling.

To support its specialist market which can involve travel to high-risk destinations and potentially volatile countries, Wings is expanding its portfolio of travel risk management resources with the introduction of a disaster and crisis response service that includes traveller evacuation planning and coordination, search and rescue logistics and emergency medical assistance.

The company is also launching a dedicated consular assistance service, which provides in-country diplomatic advice to resolve incidents such as lost passports and visa issues, as well as more serious scenarios such as crime, missing persons or abduction.