Volatile oil prices put aviation industry in a fix

September 24th, 2008 - 8:38 pm ICT by ANI  

New Delhi , Sept 24 (ANI): The sharp rise in fuel prices has pushed global aviation industry in crisis with 5.2 billion dollar losses this year and forecast of 4.1 billion dollar next year, says International Air Transport Association (IATA).

Director General and Chief Executive Officer (CEO) of IATA, Giovani Bisignani, while addressing an interactive session in New Delhi today, said that one dollar increase per barrel of oil costs 1.26 billion dollars to the aviation industry.

First the global industry is in crisis. You know you have seen the figures, 5.2 billion dollar losses this year, a forecast of 4.1 billion dollar next year. Keeping in mind, 5.2 billion dollar losses, this was a forecast on price of fuel of 113 dollar a barrel. This could logically change if the fuel changes. Just to keep in mind one dollar increase per barrel means 1.26 billion dollar in the cost, said Bisignani.

Bisignani called for urgent action to help Indian carriers to weather away the storm of high costs and falling demand as the global crisis resulting from high oil prices is hitting India hard. Indian carriers could post 1.5 billion dollar in losses in 2008, the largest outside US.

Indian aviation industry’’s growth has slowed from 33 per cent in 2007 to 7.5 per cent for the first six months of this year. And for the last two months it has been negative.

September is not looking very good. We have now couple of months with decline - August was 70 per cent and September will not be much better. So actually from a very fast growing industry we have turned into an industry with negative growth rates, said Wolfgang Prock Schauer, CEO of Jet Airways Limited.

Aviation industry sources at the conference said that the 2008 fuel bill would be 186 billion dollar. That’’s a 50 billion dollar increase in just one year.

The demand is already falling. Global international passenger growth in July was 1.9 per cent compared to 7.3 per cent in 2007. And freight traffic declined by 1.9 per cent. The situation is in no way rosy, added aviation experts. (ANI)

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