Airlines must pass on fuel costs - BP

24 June 2008 21:36  [Source: ICIS news]

HOUSTON (ICIS news)--The future of the commercial aviation industry depends on how well carriers pass increased fuel costs on to the consumer, BP’s general manager of global energy Mark Finley said on Tuesday.

The cost of jet fuel has doubled in little over a year, sending shockwaves through the industry as carriers manage to operate in an unprecedented fuel cost environment.

How the airlines are able to cope with those fuel costs and adjust operations depends “crucially on [their] ability to pass those costs along,” Finley said.

United Airlines and American Airlines have announced that they were adding a service fee for checking one bag.

Delta Air Lines said it is reducing flight capacity by 13% in the second half of this year while Continental Airlines said it will no longer fly to 15 cities.

Northwest Airlines, Air Canada, Virgin America and AirTran Airways announced plans to scale back capacity, ground jetliners and shed jobs.

However, the only real change that can occur would be if the cost of oil started to fall, Finley said.

“At the end of the day, it’s the price of crude oil,” Finley said.

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By: Steven McGinn
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