[Photo by Kim Jae-hoon]
Jet fuel prices jumped by more than five-fold over 10 months to zoom back to the levels of before the Covid-19 outbreak even as passenger travel remains restricted, adding more woes for Korean airliners barely managing with domestic flights and cargo deliveries.
Air fuel prices averaged at $66.17 per barrel as of Feb. 12, compared with $13.06 in April last year after Covid-19 developed into a pandemic, data from the International Air Transport Association (IATA) showed on Thursday.
Fuel price topped $50 in November and continued upwards. As of the end of January 2020, a barrel of jet fuel cost $66.68.
The recent surge is in line with the hike in global oil prices. U.S. West Texas Intermediate (WTI) crude soared to $59.62 per barrel on Feb. 12.
Jet fuel prices recently have risen faster than oil prices. The spread between air fuel prices and WTI had been negative $1.1 in May last year, compared with $15.12 at the beginning of the year. It has recovered to $6.55 last month.
“Fuel prices are rising faster than oil prices as initiation of Covid-19 immunization has propelled consumption,” said an official from the refining industry.
This is more bad news for Korean airliners relying entirely on fuel imports. The change of $1 in oil price affects $30 million in the bottom line for airliners.
Even full-service carriers who have been running international flights to deliver cargoes instead of passengers also may make loss if fuel price strengthening continues.
The number of passengers on domestic routes shriveled 46.8 percent on year to 1.46 million last month, while those on international routes plunged 97.3 percent to 210,000.
“When flight operation becomes normalize, expensive fuel cost could heavily burden carriers,”said an industry insider.
By Han Woo-ram, Song Gwang-sup and Lee Ha-yeon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]