Two dozen airlines go under due to oil prices

According to statistics released by the International Air Transport Association (IATA), record high oil prices have forced 24 airlines to declare bankruptcy and discontinue operations over the course of the past few months. The IATA also warns that many more are likely to follow in their footsteps, especially if oil remains above $130 per barrel. Over the course of the past six months, the cost of oil has soared by more than 42 percent, and carriers throughout the world are struggling to stay afloat.

The IATA also projects that the commercial airline industry will lose around six billion dollars, if oil climbs above $130 per barrel, but carriers will still generate a staggering $2.3 billion loss, even if the price of fuel manages to go back down to $107. Yet this much more positive scenario seems unlikely, especially ahead of the busy summer season.

Members of the IATA are currently meeting in Istanbul, Turkey, where some of the industry’s top players are discussing the problems facing all airlines. Yet Giovanni Bisignani, IATA’s director, told BBC News that the string of 24 recent bankruptcies is only the tip of the iceberg, and that passengers and airlines alike should prepare for many more insolvencies in the coming months. In order to help this very troubled industry, Bisignani suggested that labour unions suspend any campaigns aimed at increasing their wages and he called on governments around the world to also chip in, by decreasing the hefty taxes that all carriers must pay.

www.iata.org