LAST month 230 international airlines gathered in Singapore for the annual meeting of the International Air Transport Association (iata), their trade body. The price of oil, at more than $110 a barrel, cast a pall over proceedings: a rise of $1 a barrel adds $1.6 billion to airlines' costs, and iata expects a barrel to cost an average of $30 more this year than last. The industry's net profits of $18 billion in 2010, a rare good year, were forecast to plunge to $4 billion in 2011 (see chart 1). Yet only a fortnight later at the Paris Air Show airlines went on a $90 billion shopping spree, ordering 730 planes from Airbus and 142 from Boeing, enough to keep production lines humming for seven years.
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