Rising oil prices may scupper the current strong growth in the aviation industry, warned the International Air Transport Association (IATA).
Passenger traffic rose 8.2% in January, compared to the same month in 2010, IATA's latest figures reveal.
Giovanni Bisignani, IATA’s CEO, said most major indices were pointing to strengthening world trade and economy growth.
“This is positive for the industry’s prospects,” he said.
However, instability in the Middle East has sent oil prices “skyrocketing”, said Bisignani, which represents the emerging worry.
IATA’s most recent forecast for the industry is a profit of $9.1 billion and a profit margin of 1.5%, but these figures are based on an average annual oil price of $84 per barrel.
Today the price of oil has reached $100 per barrel. If the high price continues, even with the increase in traffic, airlines may struggle to make a profit this year.
Bisignani said: “2011 is starting out as a very challenging year for airlines.”
British Airways has admitted its largest cost is fuel, but says if the increase in oil prices continues, it will up the fuel surcharge paid by passengers.
The airline said it is monitoring the impact of Middle East instability on fuel prices and has the flexibility to change capacity plans if necessary.
A Lufthansa spokesman told ABTN said that while the airline has hedged the majority of its current fuel requirements, this can only slow down the effect of the rise in prices, not prevent it.
He said: “The airline industry is really dependent on the fuel energy and the rise of the oil price is a real threat for all the airlines.”