Rising jet fuel price puts extra pressure on airfreight sector
The rising price of jet fuel this year is further burdening companies with airfreight shipments and could reduce limited capacity if passenger airlines opt to scuttle cargo-only flights temporarily operated since the start of the pandemic, industry officials say.
The average price for jet fuel closed Friday at $66.90 per barrel or $1.59 per gallon, more than double the cost (70 cents a gallon) to refuel an aircraft 12 months ago and nearly as expensive as before the global crisis, according to energy information provider Platts. Spot prices for U.S. jet fuel on Friday were $1.68 per gallon, Argus Media’s index showed.
The price of Brent crude oil averaged $65 per barrel in March, up $3 per barrel from February and $33 per barrel from March 2020 as demand for fuel increases in countries reopening from lockdowns amid production limits set by OPEC and other oil producers. It finished Friday trading at $63.20 per barrel.
Airline industry officials say higher prices for fuel, which accounts for about a quarter of operating costs, will make it more difficult for airlines to return to cash-positive operations. The industry lost $118.5 billion last year and sharply reduced flight operations to slow the run on cash as customers avoided travel because of health concerns. International traffic remains almost 90% below pre-pandemic levels, and airlines borrowed heavily to remain in business.