Rising Fuel Costs to Bring Airlines Down

“Oil is once again robbing the industry of a return to profitability,” says Giovanni Bisignani, the association’s director general and CEO. “Each dollar added to the price of a barrel of oil adds $1 billion in costs to the industry. Cost reduction and efficiency gains have never been more critical.”

Bisignani notes, however, that despite $10 billion being added to cost estimates, bottom line impact is being limited to $1.4 billion as airlines – carrying both passengers and cargo – have been reducing costs, increasing yields and improving efficiencies.

Not all global regions are predicted to do poorly in 2005. European airlines are projected to break even while carriers in Asia Pacific are expected to earn in the neighborhood of $1 billion this year. North American carrier loses, however, may exceed $8 billion.