Despite a sudden fall in oil prices at the end of last week, the impact of the successive increases on Mauritius may be severe. During the past three weeks, oil prices kept rising reaching nearly 50 USD a barrel. It has now come down to around 47 USD, which is better but the consequences of the previous increases can already be seen on the local scene. Air tickets will be subject to a 7% rise as from 1st September.

With the problems the country is facing at the moment, Mauritius could do without such a rise. Tourism may be particularly affected by this phenomenon. While the number of arrivals has already gone down since the beginning of the year, things could get worse still.

Air tickets for departures from Mauritius are to increase by 7%. This rise is called the “fuel excess” as it is proportional to the price of fuel. Practically all airline companies have adopted this “fuel excess”. The Board of Airlines Representatives (BAR) – which includes all airline companies established in Mauritius – have agreed on this 7% rise for long haul trips. Regional trips like Reunion, Seychelles or Madagascar should not be affected by the same rise.

As oil represents 20 to 22% of the total costs of Air Mauritius, the local company is also demanding that its customers pay this excess charge, which may go from 14 euros to 28 euros for long haul destinations. Stakeholders of the airline industry think that oil prices will remain very high until the end of the year. This is probably why they have to make decisions so quickly.

As the prime minister explained, “the rise in oil prices has a direct impact on long haul tourists”. Air Mauritius will have to react rapidly to this problem by cutting on its operation costs. Although it has already started by reducing or even cancelling services between Mauritius and non-profitable destinations, it will have to persevere to remain competitive and continue to fill the country’s hotels.

Other fields are also bound to suffer from skyrocketing prices. “The effects are really severe on all our economic sectors. This rise has an impact on the balance of payments, the EPZ, the manufacturing sector, but also on tourism and the national airline company, Air Mauritius,” the prime minister warned at his last press conference.