Spiking Oil Prices Hit Air Transportation

The skyrocketing price of oil is posing a threat to the recovery of air transportation and to its plans to start reaping benefits all over again following a recent deep crisis, the Geneva-based International Air Transport Association (IATA) reported this week.

Under normal circumstances, fuel accounts for 16 percent of operational costs for airlines. Yet the 55 percent increase in oil prices from 2003 could make fuel expenditures shoot up from $8 billion to $12 billion overall.

“This would jeopardize plans to make a humble comeback in terms of benefits,” IATA Director-General Giovanni Bisgnani said.

The association, gathering some 270 airlines from 80 nations, informed a 15.4 percent jump in the number of airborne international passengers in the first third of the year compared to the first four months of 2003. Cargo transportation, for its part, was up 11.3 percent in that period.

Stacked up against the first third of 2000 –before the aviation sector flew into a spiraling crisis as a result of the 9/11 terrorist attacks in the U.S.- passenger and cargo traffic had climbed 8.5 and 17 percent, respectively.

According to Mr. Bisgnani, the current crisis triggered by overwhelmingly higher oil prices “comes to underscore the sector’s vulnerability in the face of external impacts.”

In North America, international air traffic of passengers soared 15.5 percent, followed by an 11.5 increment in South America, 11.6 percent in Europe and 9.4 percent in Africa.

The best first-third number (38.7 percent) was posted by the Middle East, regardless of the Iraq war.

The Asia-Pacific region came next with a 15.6 percent increase in the number of flown travelers between January and April this year.