Higher Wages, Fuel Prices Turn Up Cost Pressure on Airlines

Feb. 15, 2018
Labor costs surpassed fuel as global airlines’ biggest single expense in 2016, at 22 percent of costs against just under 21 percent for fuel. That is expected to jump this year to 30.9 percent versus 20.5 percent for fuel.

BERLIN (Reuters) - With inflation paramount in investors’ minds at a time of rising wages and oil prices, the line separating winners and losers in the global airline industry this year looks likely to be drawn on how well they manage costs, especially on the labor side.

Industry body IATA in December flagged higher spending on labor and fuel - which make up about half of airlines’ operating expenses - as their members’ biggest challenge in 2018, especially after several years of record profits.

Labor costs surpassed fuel as global airlines’ biggest single expense in 2016, at 22 percent of costs against just under 21 percent for fuel. That is expected to jump this year to 30.9 percent versus 20.5 percent for fuel.

Read more: https://www.reuters.com/article/us-airlines-wages-inflation-analysis/higher-wages-fuel-prices-turn-up-cost-pressure-on-airlines-idUSKCN1FY292