Fitch Ratings assesses toll of high jet fuel prices on US aviation industry

Nov. 16, 2004
The recent surge in oil prices has aggravated the already-difficult economics of the US aviation industry, said Fitch Ratings Ltd.

By OGJ editors

HOUSTON, Nov. 16 -- The recent surge in oil prices has aggravated the already-difficult economics of the US aviation industry, said Fitch Ratings Ltd.

Jet fuel increased to about $1.65/gal in early November from 86¢/gal at the same time last year.

Jet fuel is the second largest expense of airline companies behind labor costs—driving 15-18% of annual operating costs, a Fitch research note said.

"Absent a significant market correction, crude oil prices persisting well above the historical norms will undermine airline operating results again in 2005," Fitch said. "Higher jet fuel prices in 2004 have driven over $5 billion in lost operating cash flow among US airlines vs. the 2003 baseline."