[School Project: Introduction of Air Transportation]

1. FUEL PRICE ISSUES
IN AIR TRANSPORTATION
PRESENTED BY:
AMY SOFIA
KU AINA EZANIE
NAQIYAH
NURMAIRAIZWA
MIHADA HUSNA

2. CAUSE OF OIL PRICE FLUCTUATION
OPEC (Organization of Petroleum Exporting Countries) –
control over 40% of the global oil supplies
Influences the price of oil by setting production levels to meet
the global demand for crude oil
Crude oil  subject to the economics laws of supply and demand:
• Demand exceeds supply, price increase
• Supply exceeds demand, price decrease
• Politics, interest rates and natural disaster influence the prices
of oil

3. REACTION FROM AIRLINE INDUSTRY
• IATA predicts that fuel costs will reach the amount of $188
Billion ($70 per barrel) in 2018 for the airline industry
• Some entities have resorted to fuel hedging to protect
against the volatile oil costs
Fuel hedging  futures contract that allows airline to
establish a fixed or limited cost and increase certainty of fuel
price when market experience consistent hikes

5. IMPACT TO AIRLINES
• Squeeze airline production
• Impact the cost of air travel
(2014-2019)
• Booming ASEAN market
• Era of efficiency

6. IMPACT TO SOCIAL
 Inflation, interest rates and unemployment
 Reduction in globalization
 Impacts on transport
 Impacts on communities

7. HOW AIRLINES COPE WITH IT?
 Engage in fuel hedging
 Use greener fleets
 Reduce the number of flight
 Increase fares

8. CONT…
 Use lighter equipment in cabin
 Reduce aircraft speed
 Optimize flight planning

9. THANK YOU 