Bloomberg Intelligence Official: Global Aviation Industry Faces Tough Test from Fuel, Interest Rates

Doha, November 03 (QNA) - Global Lead of Aerospace, Defense and Airlines Analysis at Bloomberg Intelligence George Ferguson said the global aviation industry has entered a challenging period as jet fuel prices have nearly doubled since the beginning of 2026, while higher interest rates and borrowing costs are weighing on consumer demand. 
Speaking during a presentation at the 59th General Assembly of the Arab Air Carriers' Organization (AACO) in Doha, based on third-quarter results from US airlines, Ferguson said the results offer an early indication of emerging trends in a high-fuel-cost environment. 
He explained that rising prices have significantly affected airlines' financial statements worldwide, with the timing of the full impact varying according to their hedging policies. 
He presented data on jet fuel prices on the US Gulf Coast and the refining margin (crack spread), noting that the latter now accounts for about half the fuel price, making refining a major factor in the final cost. 
He added that key benchmark markets in Europe and Asia are facing similar pressures, with consumers feeling the impact of higher costs, which is weighing on demand. Ferguson identified high interest rates as a second major challenge. 
He said the US Treasury yield curve had risen sharply to around 5 percent, while the Federal Reserve remained hesitant about further increases. Meanwhile, major technology companies are driving a massive borrowing boom to finance AI data centers.
He noted that US GDP grew by 3.4 percent in the third quarter, supporting the prospect of interest rates remaining higher for longer. 
Since aircraft purchases are made in US dollars and US interest rates determine borrowing costs globally, this will place an additional burden on airlines. 
He also discussed credit default swaps (CDS), explaining that they reflect the cost of insuring an airline’s debt and indicate its borrowing costs. Airlines worldwide are facing increases in these costs. 
He said the highest-risk US carriers were suffering the most, with some reaching levels suggesting that certain companies could soon exit the market. Even the most creditworthy airlines, however, have not been spared rising spreads. 
On economic growth, Ferguson said that keeping fuel prices at current levels would likely slow global economic growth and place further pressure on travelers, posing an additional challenge to the industry. (QNA)