- The global airline industry’s fuel bill grew by US$25 billion to US$136 billion in 2007 (accounting for 29% of operating expenses at US$73/barrel Brent of oil).
- This is an increase of more than 300% on 2003’s fuel bill of US$44 billion (that accounted for 14% of operating expenses at US$28/barrel Brent).
- In spite of this large increase, higher revenues and efficiency improvements helped the industry post a net profit in 2007 for the first time since 2000.
- In 2008 the fuel bill is forecast to grow to US$186 billion (accounting for 36% of operating expenses at US$113.0 per barrel Brent) due to:
- Traffic growth
- Increase in oil price and the renewal of fuel hedging contracts at higher prices
- An increase in refinery margins of $34 billion (compared to 2003 level)
- Offset, in part, by further efficiency gains in fuel use made by airlines
- Industry losses of US$5.2 billion (under consensus view of oil price) and US$6.1 billion (under futures market view of oil price) are forecast for 2008.
Industry Fuel Costs and Net Profits
Updated: 9/2008 Next Update: 12/2008 Source: Industry Financial Forecast Table (IATA Economics)
Fuel Impact on Operating Costs
| Year |
% of Operating Costs |
Average Price per Barrel of Crude |
Break-even Price per Barrel |
Total fuel cost |
| 2003 |
14% |
US$28.8 |
US$23.2 |
US$44 billion |
| 2004 |
16% |
US$38.3 |
US$34.5 |
US$61 billion |
| 2005 |
22% |
US$54.5 |
US$51.8 |
US$90 billion |
| 2006 |
26% |
US$65.1 |
US$64.8 |
US$111 billion |
| 2007 |
29% |
US$73 |
US$76.5 |
US$136 billion |
| 2008 F |
36% |
US$113.0 |
US$109.8 |
US$186 billion |
| 2009 F |
40% |
US$110.0 |
US$107.5 |
US$223 billion |
Updated: 9/2008 Next Update: 12/2008 Source: Industry Financial Forecast Table (IATA Economics)
Impact of Refinery Margin on Fuel Costs
Updated: 9/2008 Next Update: 12/2008 Source: Industry Financial Forecast Table (IATA Economics)
Updated: September 2008