Paper Topic:

American Airlines

Running head : AMERICAN AIRLINES

American Airlines

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American Airlines

Implication of Oil Prices to American Airlines

Since 1999 , oil prices in the world market has been rapidly increasing due to political and economic turmoil oil in producing countries , and the impeding shortage of oil in the world market also created enough room for the prices of oil to spike . OPEC and other leading independent oil producers in the market have been increasing the prices of their oil in the world market as a reaction to the economic status

of industrialized and developed countries . As a result , inflation rate unemployment rate , GDP of various countries in the United States and Europe has been adversely affected leading to tremendous amount of losses . Among the countries that severely affected by the said oil price hike in the world market would be the United States as it serve as the top consumer of oil in the global community

Oil is indeed becoming pricier every minute as a barrel of the benchmark West Texas Intermediate crude hit roughly 123 USD in intraday trading last May 7 , 2008 and being expected to reach 200 USD mark within the next two years based from the growing demand and limited supply of crude oil in the domestic market (Herbst , 2008 . Due to this , jet fuels of the airline industry is being expected to have a robust increase as the effect of high demand and limited supply condition in the domestic market continues to develop

Various industries of the United States have been experiencing financial losses as their operational costs increased tremendously caused by the rising fuel costs . Furthermore , the said oil price hike drove the second quarter costs of airline industry by 5 .6 higher by 2007 - more than twice the rate during the same period a year earlier Airline industry recorded 9 .1 billion USD worth of losses last year as oil prices continues to spike in the market and the federal government is presently having a hard time to provide aid to the said industry given the present condition of the economy . As a precautionary caution airline companies all over the United States start to raise their ticket prices and American Airline lead the said airfare hike . American Airlines was forced to increase its fare by as much as 20 on a round trip tickets just to offset the rising fuel costs , the biggest in a recent series of hikes carriers have pushed through as oil prices surged (Schreck , 2007 . According to the American Airline , the nation 's biggest carrier , it was forced to increase their fare to protect their financial status and to recover from the costs associated with the rising prices of crude oil and jet fuel in the market

Other airline carriers also followed after the said airfare hike of American Airlines , Delta Airlines and Alaska Airlines are just two of the airline companies that followed the said action of American Airlines (Honoluluadviser .com , 2008 . Unexpected oil price increase in the...

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