Sky News business presenter Emma Crosby

Another day, another airline tells us it’s having financial difficulties.

This time it’s the business class only carrier Silverjet who’s shares were suspended on the London Stock Exchange after the company admitted it’s having difficulty raising funds from investors.

In the short space of five months two other high-end flyers, MAXjet and Eos, have gone bust but it’s not just the niche players who are suffering.

BMI shocked the city today by saying high oil prices have nearly halved profits.

Yesterday American Airlines said it’s been forced to cut routes and jobs and on this side of the pond Air France KLM warned shareholders that profits could fall by a third as rising costs bite. And BA’s Willie Walsh told me just last week that there will be more high profile casualties.

Only carriers with strong balance sheets and cash to spend, who have hedged the oil price and updated their fleet to be more efficient will survive.

The escalating price of oil is truly crucifying the airline industry. Crude oil is up 48% this year alone but jet fuel is up an astonishing 58%.

For every dollar crude rises by, airlines on average lose 16 million pounds. That means yesterday’s oil price spike potentially cost airlines 80 million pounds. Wow.

So what can we expect? More bankruptcies and more airline consolidation.

And for us travellers? Well, Willie Walsh hinted that the golden era of cheap air fares may be over.

So no more £30 flights to Barcelona perhaps. And may be more ancillary charges such as paying extra for your luggage, or even having to buy your food and drinks on board. Doesn’t sound like much fun does it.

Let us know what you think.

Comments

[Al Davies, Southern Spain 27 May 2008 09:21:30]

Wasn't sure where this blog was going, thought it was about flights cost's and rising fuel prices? anyway, I travel accross one pond or another around 10 times a year and still find plenty of bargains on the internet with one airline or another. It's not the flight price, it's the airport tax which heaves the price up. Example, Bournemouth to Spain, flight cost £55 with extra fuel duty, fair enough, can't drive from London to Liverpool on that. However, then add the £60 airport tax and you've doubled the cost! not the airlines fault. We're still regular flyers but not from Bournemouth or any south coast airport, rather travel a couple of hours to the Midlands or London, then it's still cheap!

[Khalid 23 May 2008 15:46:30]

[Sister Sledge] you appear to be [Lost in Music] as economy is that way/

[Khalid 23 May 2008 15:38:37]

Oh Dear!
If isn't one thing its another.
Airlines have long enjoyed aviation fuel discounts for many many years and had they steered clear from the brown school of prudence budgeting, they too would have put something aside and have the munitions to tackle global market turbulance, as after all they know about turbulance more than anyone with a rudder or two.
Now, what these comaonies can do is get together with travel agents, and stop flying empty planes fullstop.
Then there will be no need to further distress the travlleing public as they board their [Silver Shadow] after they have enjoyed the free tea and coffee facilities provided at the airports, which they have long ignored.
[Atlantic Starr] you are clear to take off>>>>>>>>>>>>>>>>

[Michael Cornwall 23 May 2008 15:36:38]

I will carry on and try to keep you up to date with how we survive on the streets.
I have just spoken at length to Phil Blundell at County Mortgages and he told me he was busier than last year and still mortgaging remortgaging and financing, busier than last year and busier than the start of the year. He felt people were taking the inititive themselves, and doing somthing positive. Another meat processing company down here is fighting hard and not laying the expected 100 off but 60. That is a good effort.Despite the lack of initiative from the government,In Cornwall we are trying to have a go.Luckily I can walk to the beach in 1 min. And walk on beautiful cliffs look at dolphins, rare birds, foxes, deer, badgers, all for free