Rising oil prices burdening Asian carriers

Libya holds Africa’s largest oil reserves

A large increase in oil prices caused by political unrest in Libya, has seen shares in Korean Air Lines plunge by 10 per cent, leading declines among several Asian carriers.

According to Bloomberg, the drop represented Korean Air’s biggest intraday decline since May 2009.

“A jump in fuel prices is going to be a big cost burden for airlines,” NH Investment & Securities Co’s Jee Heon Seok said.

“There’s only so much you can offset with surcharges.”

Asiana Airlines, Singapore Airlines, Cathay Pacific, All Nippon Airways, Air China, China Airlines and EVA Airways have all seen their stocks fall as a result of the recent tensions in Libya, Bloomberg reported.

According to the International Air Transport Association, a US$1 increase in the price of crude oil boosts airline industry costs by about $1.6 billion.
Source = e-Travel Blackboard: M.H
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