Oil shock threatens airlines recovery
February 25th, 2011 - 7:51 pm ICT by Aishwarya BhattNew York, Feb 25 (THAINDIAN NEWS) Whoever said the world is a global village is very right. Whatever happens in one country quickly ripples its effects on the whole planet.
The airline industry is currently under threat because of the soaring prices of crude oil. Before the protests in Middle East and North Africa began, oil prices were relatively stable around the $80 mark. After the world suffered the effect of high oil prices in 2008, many people hoped that at long last the right price of oil has been found.
That seems not to be the case. Driven by fears that supply would be disrupted as a result of all the violence that are taking place in the Arab world, the price of oil reached the $120 mark on Thursday. That was the first time in more than 2 years that the price of oil has been that expensive.
The US airline industry has been struggling since year 2000. The industry had its best year in 2010 when it made a profit margin of 2%. The 2010 gains would be wiped out if the price of oil remains high.
Players in the industry complain that after they managed to bring labor cost down by cutting their workforce, the price of oil seems to have eaten away any progress that they made. They estimate that fuel is currently the highest cost for the airliners.
The industry reacted by increasing the rates of some categories of their tickets. There is a limit to how far the airliners can increase their fares because of stiff competition. The industry have to come out quickly with ways to survive or face a certain collapse.
- Jet fuel price cut by Rs.622 a kilolitre - Dec 31, 2011
- Oil firms increase jet fuel price by two percent - Nov 15, 2011
- Gas prices continue their upward surge - Mar 06, 2012
- Oil firms increase jet fuel price by 3.70 percent - Nov 30, 2011
- Rationalise tax structure for aviation sector: Assocham - Nov 12, 2011
- Inflation, oil prices major concerns: Pranab - Feb 25, 2011
- Oil firms ask government to compensate them - Apr 17, 2012
- Petrol price hike in the offing as crude soars - Mar 23, 2012
- Diesel price deregulation not inevitable: Basu - Mar 03, 2011
- Vayalar tells states to cut tax on jet fuel - Sep 19, 2011
- Oil firms cut jet fuel prices by 1.38 percent (Lead) - Dec 15, 2011
- Airlines try to increase fares yet again - Feb 24, 2011
- Virgin America reports record-setting performance for second quarter 2010 - Sep 10, 2010
- Wikileaks: Saudi oil reserves running low - Feb 10, 2011
- Crude oil prices now steady after major drop - Jun 24, 2011
Tags: airline industry, airliners, airlines, arab world, collapse, crude oil, fears, global village, middle east, north africa, oil prices, oil shock, price of oil, profit margin, protests, ripples, stiff competition, violence, workforce, year 2000