Fuel price weighs on minds of airline chiefs

High oil prices are weighing heavily on the minds of airline chiefs – and problems are being made worse by economic instability, according to the head of the international body […]

Register now!

By Vicky Ellis

High oil prices are weighing heavily on the minds of airline chiefs – and problems are being made worse by economic instability, according to the head of the international body for aviation.

Tony Tyler, IATA’s Director General and CEO said the industry faces “razor-thin profit margins”, expecting to make $3 billion profit this year from $633 billion (£410bn) revenues.

He said: “One of the toughest issues that we face is the high price of fuel. Our March forecast was based on an average oil price of $115. For the first five months of the year, Brent crude price averaged just under $118/barrel. And the most recent spot prices are just below $100. That is welcome relief for airlines. But let’s also remember how dramatically fuel costs have risen for airlines.”

With fuel now more than a third of average costs compared with just 14% a decade ago, he warned, there is a risk political events could push the price higher very quickly.

Mr Tyler added: “The European sovereign debt crisis is unresolved and we are seeing signs that it is starting to affect Asia’s export-driven economies. The largely jobless recovery from the 2008 global financial crisis is proceeding at a glacial pace. Passenger demand is strong, cargo is weak and the industry’s profitability remains razor thin.”

His comments come ahead of a meeting in Beijing next week where some 650 leaders will discuss issues facing the industry.