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May 30, 2005    

IATA laments fuel costs

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by Brian Turner
IATA laments fuel costs

According to the director general of the International Air Transport Association, high oil prices are “destroying” the profitability of the world’s air carriers.

In an address to the annual meeting of his organization, he said that US airlines have had the most trouble, with collective net losses of $9.1 billion dollars in 2004.

Much of these losses occurred because they were not able to hedge fuel prices to any great extent because of their poor finances and bad credit ratings.

In contrast, Asian air carriers were reported to have had profits of $2.6 billion last year and European airlines had $1.4 billion in profits, largely due to the weakness of the US dollar.

Collective fuel costs for the world’s airlines, which have gone up $39 billion in two years, are said to make up about 22 percent of the industry’s total costs.

Non-fuel costs have been falling by 2 or 3 percent per year and are expected o fall by 4.5 percent this year, while passenger traffic is forecast to go up 5.4 percent in 2005.

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