Fuel prices may decline by 10% to 15% from current rates, but long-term trends will remain a major threat for airlines especially in North America, says Stephen Rimmer, chief executive of Guggenheim Aviation Partners.
Addressing the SpeedNews aviation industry suppliers conference in Los Angeles, Rimmer said that the oil price standing at $104 a barrel presents "problems that are going to impact the ability of airlines to function, problems which are going to affect the willingness of lenders to lend, problems which are going to challenge the order positions that we already have and the growth that's projected in our industry".
The full impact of the rising fuel prices will be felt most acutely by North American airlines, he added. US airlines suffer in a high fuel price environment from a more inefficient, short-haul network, and an ageing narrowbody fleet for which there exists no next-generation replacement aircraft ready for market for perhaps a decade.
Fuel prices per barrel may eventually fall back to the $90s or perhaps the $80s, but no further, he said. However he added: "we're not going to see $50 per barrel oil, which some airlines' business models were based on as they exited bankruptcy."