Global downturn hits BA’s June traffic

BA has released its June traffic figures, showing a detiorating market. Traffic for June 2008 was down 3.7%, following on from a 0.7% drop in May, The carrier said that significant increases have been made to prices including surcharges reflecting the rise in fuel costs from US$110 per barrel at the beginning of May to US$147.

It also reported that the UK consumer environment is difficult leading to reduced traffic volumes.  Longhaul premium and shorthaul non-premium continue to be the better performing segments of the business.

BA’s June figures indicate that airlines will lose revenue if they attempt to cover skyhigh fuel costs with increases in fares and fuel surcharges, which are levied on passengers to cover the rising cost of keeping planes in the air.

According to BA’s own forecasts, the airline will not make a profit this year if the oil price stays at the current record of US$145 per barrel. Even at US$125 per barrel, BA’s operating profits are wiped out. The UK flag carrier has a profit margin of 10% and is one of the world’s most profitable airlines, but the relative minnows in the industry are not expected to survive if customers are put off by higher fares and a weak global economy.