Chicago is My Home

02
Jun

Report: Airline Industry to Lose $2.3 Billion in 2008 Due to High Crude Oil Prices

Author: Adam Fendelman, Category: Travel

CHICAGO – The airline industry will lose $2.3 billion internationally in 2008 due to the unprecedented rise in the price of crude oil, the International Air Transport Association (IATA) announced on Monday.

The IATA, which represents more than 230 airlines worldwide, in March 2008 predicted a $4.5 billion industry profit based on oil prices of $86 per barrel of crude oil. Monday’s prediction was based on a revised $106.5 per barrel estimate.

Chicago airlines and Chicago’s O’Hare International Airport and Midway International Airport have been hit hard by the fuel increases and industry contractions. UAL’s United Airlines has trimmed its work force, raised round-trip fares by as much as $60 and continues to explore merger options.

American Airlines, which uses O’Hare as a major hub, says it will start charging customers for their first checked bag and will reduce and eliminate several Chicago-based flights in the coming months.

For every dollar increase in the price of fuel, IATA CEO Giovanni Bisignani says the airline industry’s operating costs increase by $1.6 billion. He says conditions could still worsen as oil has been trading for as much as $135.09 a barrel.

By Megan O’Neil