Soaring oil prices will eventually result in a loss of $3 billion for global airlines this year as per the notion set by industry lobby group IATA.

According to IATA Chief Executive Giovanni Bisignani, the ever-increasing hike in oil prices would affect the profitability of the organization.

The fuel bill for the industry will amount to $112 billion for this year and the amount is around $21 billion more than the year 2005 according to a statement made by the International Air Transport Association.

The cost-cutting efforts by the airlines have facilitated by the revenues costing up to 10% in of the last three years and this have significantly reduced non-fuel costs by 13% overall since 2001. Bisignani quoted, “Such efforts have moved the break-even fuel price from $14per barrel to $50.”

It is expected that fuel will make up 26% of airlines’ average costs in 2006 as compared to the 22% in previous year.

To attain profit, airlines require to fill 63.3% of their available capacity by weight in 2006. However, the expected amount is only 62.4% according to IATA. According to CEO of IATA, the governments require to eliminate barriers that are thwarting the sector’s efforts & efficiency.

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