Early last week, Air France KLM made the announcement that they are going to scale back on their upcoming winter and summer 2009 growth plans due to the high price of jet fuel. However, financially they are still doing well compared to a lot of their competition in Europe and the United States. In terms of revenue, the largest airline worldwide gave the indication that they expect their winter and summer capacities to rise by 2%. They didn’t say what their expectations were before, though, but one of their spokespersons reported that they have made cuts in expansion because of increased fuel bills.

The move of Air France KLM came with the speculation that they would have to do what their rivals have done, which is cut capacity due to the weakening of the economy globally, and not just for the increase in fuel costs. Many of the airlines in Europe, including British Airways, have made announcements about capacity cuts, and the cuts have been the most drastic with carriers in the United States, as American Airlines has scheduled to cut their 4th quarter capacity by 12%. Along with the soaring price of oil, jet fuel costs are dramatically more than before, and fuel is now the top or second most expensive item in the operating costs for airlines, which totals about 34% of costs overall.

The International Air Transport Association warned last month that there will be a loss of 3.8 billion euros this year for the industry if the price of oil is maintained at 85 euros per barrel or a loss of 1.3 billion eruos with an average price of 67 euros a barrel for the last half of 2008. A lot of carriers are expecting to have a growth during the summer season despite the capacity cuts that are expected to occur this fall.

Visit the Air France website for bookings at: www.airfrance.com

For bookings with KLM, visit www.klm.com