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Posts Tagged ‘business aviation richard koe’

Oil price fall is a bright spot for bizav too

Written by Aviation Advocacy on . Posted in TWTWTW

The high wire act that’s barely keeping the EU’s financing system from derailing the economy is far from over. The repercussions are serious for serious for the travel industry and in particular the aviation industry. The one bright spot is that poor growth prospects have caused oil prices to slump. Back in March 2012, IATA warned that a $150 dollar spike would cost the industry $5.3bn in costs. As of this week the WTI price was at just $83. The last time oil prices were this low, at $79 in 2010, the global airline industry enjoyed its most profitable year of operations. Brent’s price is more closely correlated to jet fuel and averaged $80 in 2010. But even Brent has now fallen below $100 a barrel, 20% down since the start of May. Fuel is a huge input cost for commercial airline operations, accounting for anywhere between 30% and 50% operating costs. But it’s also a major factor for business aviation operations. Between the light and heavy end of the market, 10-15% of total operational costs (including ownership) are fuel generated. To counterbalance its many other challenges, business aviation could therefore yet have at least one advantage going into the second half of 2012. Unless there’s another war in the middle east of course…

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