‘Perfect storm’ for airlines
Oil prices and the US dollar typically have an inverse relationship, so when one is high, the other is low, which helps to balance the financial impact on airlines that operate in other currencies.
That correlation, however, has broken down in recent months, with the Ukraine war causing a spike in oil prices at a time when the US is a net oil exporter and the US dollar benefiting from interest rate hikes intended to temper inflation.
Global airlines are facing a double whammy from the unusual combination of a strong US dollar and high oil prices, at a time when broad inflationary pressures and labour shortages are also putting pressure on the industry’s recovery from the pandemic.
Airlines attending the International Air Transport Association’s annual meeting in Doha this week expressed concern about the rising oil price and the US dollar.
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