Airline fuel costs in 2000 could rise
40 percent over 1999, or $4.4 billion, almost as much as the
industry made in profits last year, according to an industry
On an annualized basis, the Air Transport Association
forecast that jet fuel costs will rise to $14.6 billion in 2000
from $10.2 billion in 1999.
In the first quarter, fuel costs have soared to 77 cents a
gallon from 44 cents a year earlier, a 75-percent increase.
Airline shares have languished as industry executives warned of
losses at current fuel levels.
ATA compared the projected $4.4 billion rise in fuel costs
to the $4.85 billion net profit the industry earned in 1999.
Fuel is the airline industry's second-largest cost, after
labor. Last year, 8.8 percent of revenue was used to pay for jet
fuel and that is expected to rise to 12.1 percent this year, ATA
Despite better fuel-efficiency, the high costs must mean an
increase in ticket costs, said ATA, whose member carriers
transport 95 percent of U.S. passenger and cargo traffic.
"Our costs are going up dramatically and airlines have no
choice but to pass these increased costs, as much as possible,
on to the consumer," ATA Chief Economist David Swierenga said
in a statement.
"Passing on increased costs is always difficult for
airlines because as prices go up, it makes travel less
affordable and reduces demand," Swierenga said.
Fuel prices began an upward climb in the latter part of last
According to the ATA forecast, the outlook for fuel costs
are as follows:
Quarter Ending 1999 2000 Percentage
(per gallon) Increase
March 44 cents 77 cents 75
June 45 cents 79 cents 76
September 53 cents 69 cents 30
December 64 cents 64 cents 0