Airlines predict bad 12 months as oil prices rise and down go their profits

With oil reaching over $100 US dollars a barrel, the cost of jet aviation fuel has risen by 40%. This high percentage increase is something that airlines cannot absorb and as a result some or all the costs are being passed on to passengers.

On the same day, British Airways have released a profit warning on the back of spiralling fuel costs. Although it said that passenger numbers were still strong on long haul and business class services, its the price of oil that

Airlines normally have "options" to buy oil at a preset price in the future. easyJet have their price set at $75 until September this year, but from then they would need to buy oil at the market rate - of over $100.

It was calculated that British Airways entire profits for a year could we wiped out if the cost of oil reached $120.

British Airways and several other traditional airlines have increased their fuel surcharges in the first quarter of the year with BA charging up to £128 per return flight for long haul journeys.

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