[Source: Reuters]
Soaring jet fuel prices driven by conflict in the Middle East are likely to push more airlines into bankruptcy and spur more sector consolidation this year and next, the head of the global airline body said on Saturday.
Global airlines are grappling with higher fuel costs driven by the U.S. and Israel’s war with Iran, which has choked jet fuel supplies and disrupted key air corridors, forcing costly detours.
Budget carriers have been among the hardest hit, lacking higher margin revenue streams such as premium cabins, high-paying travelers and credit card loyalty programs.
The strain is already showing: U.S. budget airline Spirit Airlines collapsed last month, and it will not be the last, said Willie Walsh, director general of the International Air Transport Association, the industry’s main trade body.
“Unfortunately, I think there will be some carriers that will find this high fuel price very difficult to cope with,” Walsh told Reuters at IATA’s annual summit in Rio de Janeiro, adding he expects some airlines to go out of business and others to be acquired by larger carriers.
