Jet fuel fell back below $90 a barrel as oil prices eased slightly in July, but the upward trend remains in place, the International Air Transport Association (IATA) has said in its latest report. The organization also forecasts a moderate decline in oil prices “over the coming year or two”.

According to IATA’s latest fuel price analysis, published on August 19, 2018, jet fuel had dropped back to $88/bbl, a 4.6% percent decline compared to last month. Nevertheless, the price still remains almost 40% higher than year-ago level. Just in May 2018, jet fuel had risen to a high of $94/bbl.

As of August 10, 2018, the reported jet fuel price in North America stood at around $89/bbl with Europe (& the CIS) seeing $88/bbl. The price in the Asia & Oceania region was almost at $86/bbl; while in the Middle East & Africa it stood at $85/bbl.

IATA’s airlines financial analysis for Q2 of 2018 (June-July), points to the upward trend in global oil prices since early 2017, which it says has been driven by factors such as the gradual reduction in oil inventories and geopolitical developments.

Recent months saw oil prices fall back slightly due to the impact of an announced supply increase by Saudi Arabia as well as a stronger U.S. dollar, the organization indicates. But, to put the pressure on airline input costs into perspective, that is still about 38% higher than its year-ago level.

In addition, IATA says initial releases of airline financial performance for Q2 2018, point to a moderate decline in airline profitability compared to the same period a year ago.

The squeeze has been driven by a broad-based slump in airline performance in North America due to higher fuel costs; while airline profitability in Europe and Asia Pacific remained broadly unchanged from that in Q2 2017.  

According to IATA’s data, industry-wide cash flow generation actually increased in Q2 2018, compared with same period last year: to 5.3% of revenues, up from 4.8% a year ago.

Early in June, 2018, airlines around the world announced they had cut their forecast for industry profits this year due to the spike in fuel costs, warning that higher interest rates and geopolitical tensions would add to operating risks.

IATA still predicts the impact on 2018 industry-wide fuel bill to be around $44 billion.