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Oil Price Hike Increases the American Cuts Capacity

Wednesday, March 2nd, 2011

AMR American Airlines parent announced that it would cut planned capacity Growth this year as the industry is going with higher oil prices. Most of the United States airlines shares of the market moved lower on Tuesday. This happened as a result of oil prices which have continued their rise in the wake of unrest in the Middle East. This type of increase in the market value of the travel and tourism industry. The prices were touching the sky with reference of crude oil as per barrel.

The Arca airline shares index was down by 1.4 percent. Now we are at that range where the oil becomes a determinental to the oil costs as said by the Basili Alukos Morningstar analyst. This has been said that the concerned airlines have increased the airlines fares in the recent months.

According to him the increasing airfare charges may cause a great damage to the economical background of the airlines and along with it to the industry of travel and tourism. American airlines in a federal filing ahead said that the situation which has been developed these days is considered to be hurting demand of the capacity.

From the month of January the company has set a price rise of 4.3 percent for the current year. More Fuel efficient Boeing 737 and other aircrafts which are using the facility are dead sure that there will be improvement.

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