The airlines industries are concerned with some important factors. In 2007, the prices of air fuel increased. Jet fuel prices touched $80 per barrel. It heavily affected the profitability of the airlines industry. The rising prices of air fuel is a big challenge for the airline industry.
In 2007, it was projected by the International Air Transport Association (IATA) that the industry's fuel expenses will increase by $8 million and touch $119 billion.
Labor spats and low pensions also create some concerns for most airlines companies. An airline company, JetBlue, earned huge profits for many years. However, it has recently experienced losses due to its ongoing struggle with fast growth and increasing operating costs.
Even though air fuel costs have increased over the last few years, overall costs regarding air travel also have been reduced considerably. Airlines companies are competing with each other, and also keeping their air fares as low as possible. According to the Director General and CEO of IATA, the airlines industries allocation costs are lowered by 13 percent.
Allocation cost comprises selling of tickets, ticket processing as well as the processing of credit cards. They also added that costs other than fuel, component costs and per seat cost have been slashed by about 15 percent.
In recent times, the airline industry has shown some positive signs of recovery. As per the reports of IATA, the number of passengers had increased by almost 7 percent in 2005-06 due to good economic condition. Also, air freight has a gain of 5 percent. Airlines companies have started to buy new, fuel efficient airplanes to deal with the increasing number of air travelers as well as to minimize their fuel expenses. The airlines industry's prosperity has been better in the year 2007. It was presumed that the airline industry would earn $5 billion profits. However, the IATA Director General also informed that the airlines companies had a $200 billion debt. In addition, any event like the 9/11 terror attack or any such panic situation may prove to be disastrous for the airlines companies.