Low oil prices prove to be a boon to the airline industry

Although low oil prices are not exactly good news for big oil companies like ExxonMobil, which produces Mobil 1 Racing 4T, they have proved to be much more of a boon for the airline sector, with airlines in every region except from Africa expected to post profits.

Both low oil prices and an increase in passenger demand has let to revised airline industry profits totaling £27.3bn worldwide

The International Air Transport Association has said that more than 50% of the profits would be made in North America, whereas a total loss of £364m is expected to be reported in Africa.

This outlook is based upon average oil prices of $45 per barrel and crude oil is currently fetching approximately $50 per barrel. This low oil price will mean that only 19.7% of the airline industry’s expenses will be on fuel, which is a massive drop from the 33.1% they were spending on it back in 2012-13.

Also expected is a 6.2% increase in passenger numbers this year, with expected load predicted to be high at around 80%.

Here in Europe, it is expected that thanks to cheap oil and high demand, the airline industry will bring in approximately £5.2bn in profit this year alone, even though recent terrorist attacks have put some holidaymakers off visiting certain destinations.

These figures show just how important a factor oil prices are in the airline industry, amongst others, and how much influence a change in market price can have on the business world as a whole.