As fuel prices rise, airline industry profits plummet
Buckle your seatbelts, because there’s turbulence ahead for the airline industry. As fuel prices skyrocket in flight (afternoon delight), Big Air Travel is scrambling to cope. The International Air Transport Association predicted Monday that the world’s airlines will lose a combined $6.1 billion this year if oil stays near $135 a barrel. American Airlines will cut domestic capacity by up to 12 percent by the end of the year; United has discontinued its low-fare airline, Ted. Twenty-four small carriers have gone out of business in the last six months, and other carriers have retired less-efficient aircraft, cut services, and introduced fees for checking bags. Many carriers have raised fuel surcharges on tickets, but analysts warn that in these dicey economic times, only so many charges can be passed on to consumers before flyers become far less frequent.