Aviation fuel price increases by 70%

Aviation fuel price increases by 70%

The International Air Transport Association has said the price of jet fuel has continued to rise in recent weeks, having risen by 70% since the beginning of 2021.

The increase in the price of Jet A1 is placing pressure on airlines’ operational costs and endangering the industry’s profitability, according to IATA, a Swiss trade organization that represents over 290 international airlines.

According to IATA, as economic activity resumed around the world and supply remained tight, jet fuel prices have continued to rise in recent weeks.

The association disclosed this in its ‘Airlines Financial Monitor’ which was released on Tuesday.

The association said, “Monthly jet fuel price and Brent crude oil price continued to climb higher in recent weeks, and are currently well above pre-crisis 2019 levels.

“At the beginning of November, the price per barrel of jet fuel was at US$96.1, +70% year-to-date. The price increase has been driven by swiftly recovering demand as markets reopen around the world and economic activity restarts. Meanwhile, supply has remained tight since an increase in OPEC+ production has been slow.

“Many airlines have been voicing concerns about the impact of rising fuel costs — airlines’ largest operating cost item — on their financial recovery. Q4 tends to be a seasonally weaker quarter for airlines passenger revenues so the fuel price increase represents an unwelcomed challenge.”

In October, airline stocks fell across the board due to the impact of rising jet fuel prices on airlines’ operating costs, according to IATA.

According to IATA, the global airline share price index has been below pre-pandemic levels for the majority of 2021, owing to uncertainty regarding pandemic outbreaks and their influence on air travel recovery.

The IATA said, “The initial Q3 2021 results show that financial losses of airlines at the aggregated level diminished compared with Q2 2021, with some carriers reporting their first profitable quarter since the crisis started. In the sample of 27 airlines, the industry-wide EBIT margin improved to -2 per cent of revenues in Q3.”

The International Air Transport Association (IATA), passenger revenues fell 34% in Q3 2021 compared to pre-crisis Q3 2019, while cargo revenues grew 66% due to increasing freight demand.

It went on to say that total airline revenues were down 30%, and that rising fuel prices were putting upward pressure on fuel expenditures.

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