Air traffic grows in January, oil price a worry: IATA

‘Very challenging year for airlines’

Airline traffic grew strongly in January but the rise in oil prices threatens to weigh heavily on airlines, industry association IATA warned on Monday.

Passenger traffic rose 8.2 per cent and freight by 9.1 per cent in January against the same month in 2010, with air travel volumes now up six per cent from their pre-recession peak in early 2008.

But “even with good news on traffic, 2011 is starting out as a very challenging year for airlines” due to the rise in oil prices, Giovanni Bisignani, IATA’s director general and chief executive officer, said in a statement.

IATA’s forecast for 2011 made in December anticipates an industry profit of €6.6 billion or a 1.5 per cent net profit margin on €432 billion in revenues but that was based on an average annual oil price of €60.65 per barrel.

For each dollar the price of oil increases, the industry’s costs rise $1.6 billion.

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