Higher jet fuel prices to hit smaller airlines
Monday 09 August 1999
Jet fuel prices have soared in the past six months from $120 a tonne (pounds 74.07) on 1 March to $189 (pounds 116.67) a tonne on 5 August.
Many airlines hedge part of their fuel budget to minimise the degree to which fluctuations in prices impact their profits. But this is an expensive strategy and one that can only delay the problem for a limited period.
British Airways has already hedged 55 per cent of its fuel costs as far ahead as March 2000.
A spokesman for BA said this level of forward hedging was "a deviation from the norm" and that the policy was intended to prevent the airline from having to pass the cost of higher fuel prices onto its passengers.
Analysts say that if airlines do not choose to pass on the higher prices to consumers, some carriers will struggle. They claim that airlines which use fare discounts as their main strategy for winning customers will find it hardest to compete as their break-even costs rise.
One analyst said: "The weaker carriers, when they see that fuel prices are rising and that their planes are flying empty, would rather cut back capacity. This capacity would then be picked up by the stronger carriers."
The higher passenger load factors for stronger carriers would further mitigate their higher fuel costs.
- 1 Mario Balotelli: Staff at arson-hit Manchester Dogs' Home convinced Liverpool striker is behind five-figure donation
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 The response to my Pizza Express review has been overwhelming, and taught me a lot about journalism
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
Scottish independence: Despite defeat history may still point to Alex Salmond as the victor
Scottish independence referendum: Frankie Boyle reacts to nation's 'No' vote - 'To be fair, I've always hated Scotland'
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Scottish referendum: Police struggle to control Unionist rally in Glasgow's George Square
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...