Airline Fuel Costs Jump

With oil priced well over $100 a barrel, airlines worldwide are reeling. Air Pacific had budgeted $45 million for increased fuel prices this year but the real cost is now estimated at $105 million above last year's cost, an unforeseen shortfall of $60 million. Fuel now accounts for over 40 percent of Air Pacific's expenditure, a staggering $800,000 a day or $300 million a year. Soaring fuel prices played a major role in the bankrupcy of Hawaii's Aloha Airlines earlier this year and many other airlines may soon be forced to merge or cease operations altogether.

Well managed carriers like Air Pacific are able to economize somewhat by adjusting their schedules and aircraft types, but rising ticket prices are inevitable. Beginning May 26, 2008, Air New Zealand will be charging three percent more for all flights to the South Pacific. This is on top of a previous three percent increase announced by Air New Zealand in March. There's no known alternative to oil as a fuel for jet aircraft, and like peak oil, peak mass tourism could come sooner than most of us expect. Getting to the South Pacific is destined to become a lot more expensive in future years.

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