IATA warning issued due to high oil prices
The International Air Transport Association has warned that high oil prices could lead to major industry losses.
Travel Insurance News - 22/03/2012
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Officials from the industry body, which represents more than 90 per cent of the world’s air carriers, said in a statement issued on Tuesday that if oil prices continue to be pushed past expectations due to rising tensions with Iran over nuclear efforts that the airline industry could see losses totalling to as much as $5 billion (£3.1 billion).
IATA figureheads also said that the industry’s total earnings for 2012 were now to be downgraded to a forecasted $3 billion (£1.8 billion) from the December prediction of $3.5 billion (£2.2 billion), which had been modelled on oil prices at around $115 a barrel. Crude is currently trading in New York at about $107 a barrel.
Tony Tyler, the IATA’s chief executive, said in a statement that he was putting emphasis on the industry’s fragility. He pointed out global growth forecasts for 2012 of about 2 per cent and said that history shows that when GDP dips below the 2 per cent mark that the airline industry returns to collective losses.
The Geneva-based agency noted that it appears that the major impact of the European debt crisis has been avoided for the time being, which has provided some relief, but added that the skyrocketing cost of jet fuel has offset the impact.
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