How the Aviation Industry Is Affected by the Economy

Topics: Airline, Civil aviation, Federal Aviation Administration Pages: 4 (1345 words) Published: March 27, 2011
Airports are vital international resources. They play a key role in transportation of people and goods. And in regional, national and international commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal responsibility for managing and regulating air traffic operation meet with the role of state and local governments that own and operate most airports. This paper reviews how oil prices affect the airline economy and views the extent to which the economies and developing countries remain vulnerable to a long period of higher oil prices. I have chosen this topic because the airline industry in the economy of any country plays a very important role. Today’s airlines face many long standing problems. The historical trends show the true story of what is happening in the airline industry. There are many factors that contribute to these problems and Increase in fuel rates/cost is one of them. The value of a barrel of oil has a direct impact on airliners within the World’s aviation industry, at the present moment the price of a barrel of Oil has held at about “$89 a barrel”, this figure however, is very unstable. To emphasize further, in mid July 2006 a barrel of oil had broken the “$78 mark” and has since stabilized, the long term issues however, suggest the value of oil could rise even further which can of course have cost complications for airliners. With the current political disputes in Eastern Europe and the unrest in the Middle East, the cost of oil is likely to rise, as is the unstable nature of this resource and industry in general. According to the latest statistics from the General Aviation Bureau, due to the fuel price surge, the cost of fuel has accounted to 41% of the cost of major business of airline companies. The whole airline industry has an additional cost expenditure of 1.27 billion. Why does the airline industry which is always sensitive to price change take no action...
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