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Is it the airline industry collapse?
At least one U.S. airline goes bankrupt every week due to the high price of fuel, the viability of commercial air traffic thusly would call into question. Low cost European companies like Easyjet and Ryanair are affected as well.
According to data provided by ATA (U.S. Air Transport Association) six airline companies closed since early April and the seventh was put under protection of Article 11 of the bankruptcy law.
Since the beginning of year 25 airlines had to cancel their flights, "exclusively by the costs, "said an official with ATA. The rising price of oil in the international securities markets consider the price of kerosene increased in recent 12 months 65%. Eos, a company that offers business class transatlantic flights with no bankruptcy proceedings began on 26 April.
Maxjet, the competitor Eos direct activity had ceased four months before the Eos. Aloha Airlines left the market on March 31 after 60 years of existence. Analysts believe that the 20% of U.S. domestic flights should be discontinued. Given the price of $ 135/barrel, a transatlantic flight of a Boeing 767 costs $ 80,000, compared to $ 57,800 last year.
Such problems are not only faced by companies in the U.S. but worldwide. "In the last six months we suspended 25 airlines from the financial compensation system, the most important fixity of this kind in the history of the system, "according to Anthony Concil, spokesman for the IATA.
To avoid financial problems, the IATA, which includes 240 airlines, created a compensation system between the majority of its members, enabling the protection of their customers, especially in cases of insolvency. So when a customer is buying a ticket to fly the travel agency, the agency is providing money to the IATA, the airline pays to have the client. If there are serious financial problems, the company is suspended system, to be granted a refund to customers.
A similar previous record was just after Sept. 11, as eight companies carriers were excluded from the IATA, including Swissair, the Belgian airline Sabena and Ansett, an Australian airline.
Another company faced with this financial problem generated by oil prices is the U.S. company low-cost Skybus Airlines, founded in 2004 with headquarters in Ohio. The company airline bankruptcy proceedings began in April this year. The low-cost carrier could not overcome the combination "of rising fuel costs aircraft and an environment of economic slowdown, "the company said.
In the same week two other companies filed for bankruptcy, ATA Airlines and Aloha Airlines. ATA is an Indian low-cost charter air line, filed for Chapter 11 status Wednesday as a result of economic problems after the loss of a key contract for our military charter business, "said the company (CNN).
The increase in fuel prices can and will have serious effects not only in the small airlines, but across the industry. Left without money, small airlines are risking not only the restructuring, but failure as well. 6500 United Airlines pilots reported last month that 950 of them were released in late 2009. This measure is part of a restructuring plan of the company, which intends to reduce its fleet by 100 to overcome the high price of fuel.
United Airlines is not the only company in this situation. Since late May of four major American airlines, Delta Air Lines, American Airlines, Continental Airlines and U.S. Airways Group, will fire about 10 000 employees. Air Canada also said that 2000 employees will be laid off because kerosene is more expensive flights by $ 1 billion in 2008 than in 2007.
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