[CONSUMERS] Costly fuel brings dozens of airlines to their knees

( Aquí escribimos la parte de entrada que veremos extendida )

From Aloha in Hawaii to Alpi Eagles in Italy, from promising upstarts like Silverjet to legends like Aeropostal of Venezuela, more than two dozen airlines have fallen off the international radar screen this year.

Some filed for bankruptcy-law protection. Others have sharply reduced operations or limp along as charters.

While each struggled with its own set of circumstances, the toll of 25 airlines - three to four times the number that the International Air Transport Association normally registers in a year - has mounted as oil price shocks roiled the industry. Among them, 17 have ceased operations altogether.

"Each region has its own challenges but the common denominator in the last six months is the price of oil," said Anthony Concil, a spokesman for the association.

"If the business is not doing well, the price of oil is the critical factor in pushing these carriers out of business."

Among the victims is Aeropostal, a South American airline with a nearly 80-year history of surviving everything from a hijacking, fatal accidents, a three-month general strike and the Depression.

But this year, Aeropostal, the Venezuelan airline whose predecessor's daring flights over the Andes inspired a 1939 movie by Howard Hawks, ran into severe financial difficulties, a casualty of business regulations that tied its hands while fuel and other costs inexorably rose. It now operates a handful of domestic flights.

Descended from the airline founded by the French in 1929 to carry mail across the Atlantic, Aeropostal this year became one of 25 carriers that International Air Transport Association, or IATA, said could not pay their bills or have ceased scheduled operations since January.

The list includes airlines that the IATA removed from its financial system, which clears ticket sales for 450 carriers - most of the world's major scheduled airlines.

As for Aeropostal, "we just couldn't get out of the hole quickly enough," Nelson Ramiz, the former chief executive and a leading shareholder of Aeropostal, said in a telephone interview from Caracas.

After cutting its fleet from 28 planes to 5, and halting all international flights except to Miami and a trio of Caribbean destinations, Ramiz gave up.

In January, 12 years after his family bought the airline from the Venezuelan government, he negotiated its conditional sale to new managers for $23 million.

Ramiz said that the airline - made famous by the French aviator Antoine de Saint Exupéry, author of "The Little Prince," and immortalized in Hawks's movie "Only Angels Have Wings" - had been hamstrung by currency controls and was not making enough in dollars to cover the cost of refueling in Miami when he made the decision to sell.

While Air France-KLM has raised fares more than 17 times since 2004, fares on Aeropostal's domestic routes have not increased since 2005 even though landing fees, navigational charges and fuel and labor costs have climbed.

Carriers in an oil-rich country like Venezuela, where fuel prices paid by consumers and some businesses are controlled by the government, Ramiz said, are no more immune to the impact of the global oil price surge than other airlines.

"The price of fuel," he said, " goes up here every week based on the price of Brent," a standard oil price benchmark.

About half of the global aviation industry's $480 billion turnover passes through IATA's financial settlement system; most of the rest is managed directly between airlines and passengers.

When an airline ceases payments or discontinues operations, it is removed from the IATA network, giving IATA the best overview of the industry's health.

Oil prices that reached a peak of $147 a barrel in mid-July have recently fallen below $120, but are still about 60 percent above last year's levels. This, plus a credit crunch that is slowing both economic growth and demand for aviation, particularly in the United States and Europe, has produced a whole new operating environment for airlines and put fragile balance sheets under enormous strain.

No region or type of airline has been spared. Trans-Atlantic business class-only operators like EOS, MAXjet and Silverjet have gone under alongside national flag-carriers like Cameroon Airlines in Africa.

The IATA list does not include airlines like Oasis, a long-distance budget carrier that sold tickets directly to the public without IATA's involvement. Oasis, based in Hong Kong, went into bankruptcy in April. Such examples suggest that the roll call of failures could be longer still.

Giovanni Bisignani, the IATA chief executive, warned this week that the aviation industry could lose $6.1 billion this year, wiping out the $5.6 billion profit it made in 2007.

On Monday, his organization issued international traffic data showing that demand for air travel was slowing - it increased just 3.8 percent in June - a deceleration from the 5.4 percent registered over the year to date, and its lowest rate since an outbreak of severe acute respiratory syndrome, or SARS, emptied aircraft in Asia in 2003. With consumer and business confidence falling and sky-high oil prices, the situation will get a lot worse," Bisignani said.

Failures in the United States include Frontier Air, which is operating under Chapter 11 of the U.S. Bankruptcy Code, and Aloha, which went out of business at the end of March.

"Aloha was a shock to the industry in the same way that Sabena was in Belgium," Concil, the IATA spokesman, said of the Hawaiian airline that had been operating since 1946, comparing it to the Belgian national carrier that flew from 1923 until it fell into bankruptcy in 2001.

Disappearing airlines in Europe this year include Alpi Eagles, Coast Air of Norway and City Star Airlines in Scotland.

The Middle East lost Palestinian Airlines, which was based in El Arish, Egypt. It had been meant to serve the Palestinian territories before political problems helped force it out of business.

Among Asian carriers, Far Eastern Air Transport ceased operating out of Taipei.

In Africa, in addition to Cameroon Airlines, Air Mauritanie, Nationwide of South Africa and a second airline in Cameroon also stopped flying.

Some airlines, like Wondar of Spain, are limping on as charter operators.

More failures are likely.

"Falling demand and rising costs," Bisignani said, "are reshaping the industry."

Source: International Herald Tribune| By Caroline Brothers

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