The Hindu Business Line : Fuelling prices

Steadily rising jet fuel prices are preventing airlines from coming back to profits, according to airlines industry sources. Record crude oil prices, expected to average nearly $70 per barrel this year, will hamper the industry's efforts to reverse the losses of recent years. Data from the US Energy Information Administration show that the prices of benchmark crude oil averaged $63.27 per barrel in the first quarter of 2006, up 27 per cent over the same period last year. As a result, the average price of jet fuel rose approximately by 40 cents per gallon.

The industry sources apprehend that higher average prices will persist through 2006. The industry's fuel expenses more than doubled between 2003 and 2005 and rose by more than $10 billion from 2004 to 2005 alone. The industry sources, therefore, mull various options to cope with the situation. First, modernisation of the aircraft technology to reduce consumption of fuel and, second, aggressive measures to conserve fuel. Since 2000, fuel conservation measures led to fuel efficiency by 16 per cent and, yet, the effort is not having much of an impact on the overall economics. Such is the rise in fuel prices.

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