Rising Oil Prices Have Impacted The Aviation Industry

 Recently, due to the impact of geopolitical conflicts, global oil supply has been affected, leading to significant fluctuations in international oil prices and cost pressures being passed on to the downstream aviation industry

 The cost of purchasing aviation fuel, as the main variable cost in the aviation industry, accounts for a significant proportion of the total operating costs of companies. Rising oil prices will directly increase aviation fuel procurement expenses and compress the company's profit margin. "Zhu Keli, the founding director of the National Research Institute of New Economy, told the 'Securities Daily' that some international routes need to detour due to airspace adjustments, which further increases fuel consumption. Coupled with factors like exchange rate fluctuations, the difficulty in cost control continues to increase."

 A senior official from the Asia-Pacific Airlines Association analyzed that if the price of crude oil increases by 20%, the price of aviation fuel often rises several times more, due to the complex refining process and the more scarce supply chain of aviation fuel. At the same time, the closure of airspace has led to increased detours and longer flight times, further exacerbating the strain on crew resources and significantly increasing operating costs.

 The price of aviation fuel is not only affected by crude oil prices but is also closely related to refining capacity. Recent geopolitical conflicts have impacted refining facilities, potentially leading to tighter supply and further increasing cost pressures on airlines. Overall, rising oil prices pose multiple challenges for airlines, with adverse effects on costs, pricing, and market demand.