EDITOR'S COMMENT: Rising costs fuel pressure on companies

Travel Trade Gazette UK & Ireland, August, 2004

NEXT time you fill up your car with petrol and moan about the cost, be grateful you don't own an airline or run a tour operation.

Thanks to turmoil in the Middle East and Russia's biggest oil producer coming under criminal investigation, fuel prices are at their highest level since the Gulf War of 1991.

The industry has an insurance policy in the form of hedging - buying supplies forward at a set price. This will bail out many this summer, but there is a question mark after that. Moreover, you can only hedge if you can afford it - and some cash-strapped airlines and operators can't.

Pressure will mount on both as they try to absorb costs. Stiff competition among short-haul airlines means British Airways and others cannot raise prices in Europe. For...