Money Matters - Simplified

Travel group says airlines in crisis

Randor, Pa. -- The failure of at least one major U.S. airline is likely at current oil prices, a business travelers group said Monday.

Travel group says airlines in crisisGet original file (10KB)

Failures would become "a certainty if oil climbs to the stratospheric levels that some industry experts have forecast," a report by the Business Travel Coalition said.
Airlines are now paying about double for fuel compared with a year ago and four times what they paid in 2000, the report said.

Ray Neidl, an industry analyst with Calyon Securities said the fuel crisis is worse than the drop in air travel that occurred after Sept. 11, 2001, because then "you knew passengers were coming back."

"Oil at $130 is unsolvable," he said.

Business Travelers said the collapse of one major airline could cost 100,000 jobs, including an average job loss of 44,000 for people working directly with that airline. In addition, tourism, peripheral and complimentary businesses, the cost of shipments, business activity, tax revenues and U.S. competitiveness would be negatively affected, the report said.

"Oil at $130 per barrel or more is unsustainable across many industries, and will be especially traumatic for airlines," the report said.

Copyright 2008 by United Press International.