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. Last Updated: 07/27/2016

Airfares to Rise Due to Higher Costs of Fuel

GENEVA -- Rising fuel prices are forcing the world's airlines to plan higher airfares, industry chiefs said Monday.

Lufthansa chairman Juergen Weber said the German airline has already put a fuel-price surcharge on cargo shipments and plans to raise airfares for passengers.

Otto Loepfe, president of Swissair, said Switzerland's flag carrier also was putting up cargo rates and was looking at increases in passenger fares.

KLM Royal Dutch Airlines imposed a fuel-price surcharge starting Nov. 1.

Weber, chairman of the International Air Transport Association, and Loepfe, its president, spoke at the annual meeting of the 254-airline association, which heard a report that the industry was still trying to recover from the recession caused by the Gulf War.

Pierre Jeanniot, IATA director-general, said the industry was set for its third straight year of growth with profits, but "we have yet to achieve full recovery."

Jeanniot, who previously has forecast a record profit of $6 billion for international scheduled flights this year, said recent fuel price hikes would help trim the figure to about $5.5 billion.

While that will surpass the record set in 1995 of $5.2 billion, the industry still is earning less than it needs to make investments for the future, he said.

"Six years ago, we were obliged to raise prices in response to a fuel crisis in the vain attempt to stop our profits from vanishing," Jeanniot said.

But the Gulf War still knocked the airline industry into its "worst-ever string of industry losses," he said.

"Today, if not yet at the crisis stage, fuel costs are once again worrisome," Jeanniot said. More and more airlines are concerned, he said.

IATA is planning an emergency meeting next week to discuss the fuel-price issue.

Since the U.S. bombing of Iraq in September, prices of crude oil have risen some 25 percent to 30 percent, to $22.50 a barrel.