As the most fuel-intense travel method, flying is increasing in cost faster than road and rail. So, the skyrocketing price of oil is having a huge impact on the industry. Twenty four airlines have filed for bankruptcy in just the past six months, and a recent report by the institutions Airline Forecast and the Business Travel Coalition predicts much more contraction to the tune of “catastrophe.”
If prices stay at current levels between $130 and $140 per barrel, the report predicts an additional cost for US airlines of $30 billion in 2008. Recent changes in air travel including fees for checked baggage, current fuel surcharges, and charging for drinks and food will only raise a few billion dollars, leaving a huge mismatch between higher costs and revenue. They add that if predictions of $200 oil come true, (more…)