Fuel is usually the second-highest expense for an airline
next to labor.48 Therefore, fuel price increases are a major
contributor to rising operating costs in the airline industry.
A Merrill Lynch analyst indicated that for every $1
increase in price for a barrel of fuel, the airline industry
experiences a $450 million loss in pretax profits.49
According to the FAA, jet fuel costs rose by 20.1 percent
in 2004, 40.5 percent in 2005, and 30.4 percent in 2006.50
In 2006, fuel costs became JetBlue’s largest operating expense
at 33.65 percent.51 The FAA forecasts fuel costs
will remain high for the next several years. Neeleman
seriously considers fuel costs and is investigating alternative
sources of energy, such as liquid coal
Fuel is usually the second-highest expense for an airlinenext to labor.48 Therefore, fuel price increases are a majorcontributor to rising operating costs in the airline industry.A Merrill Lynch analyst indicated that for every $1increase in price for a barrel of fuel, the airline industryexperiences a $450 million loss in pretax profits.49According to the FAA, jet fuel costs rose by 20.1 percentin 2004, 40.5 percent in 2005, and 30.4 percent in 2006.50In 2006, fuel costs became JetBlue’s largest operating expenseat 33.65 percent.51 The FAA forecasts fuel costswill remain high for the next several years. Neelemanseriously considers fuel costs and is investigating alternativesources of energy, such as liquid coal
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