Air Transport

IATA director general and CEO Giovanni Bisignani expects the recent sharp increases in fuel costs will have a greater financial impact on low-cost carriers than traditional network carriers.

Speaking to Airline Business Daily ahead of the association’s annual general meeting in Istanbul, Bisignani said: “Logically this will affect more the low-cost airlines, for two reasons. The impact of the fuel price is higher on the low-cost; it is 35% of the total operating cost. Also at some of the airlines they are already in difficult waters and will probably be more easy to collapse.”

He adds: “It is a low-cost problem, because the impact of fuel on the total operating cost, the influence of the price of fuel, is higher. For our big carriers the cost of fuel [in 2007 was] 29%. In the low-cost sector it is over 35%.”

Bisignani adds, however, of increases in fuel prices: “Let’s not fool ourselves. It will be a massive kind of impact on everybody. It will hurt anybody.”

Source: flightglobal.com's sister premium news site Air Transport Intelligence news