2004: Soaring Oil Prices Batter Airlines

What a difference a decade makes.

In 2004, oil prices surged about 50%, topping a then unheard of $50 a barrel. In this December 6, 2004 cover story, we wrote about how airlines were resorting to drastic measures to reduce expenses. And U.S. carriers, plagued by overcapacity, were unable to pass the higher fuel costs on to their passengers. It was a bloodbath.

As we enter 2015, the picture could not be more different. Oil prices have fallen about 50% since July, to less than $57 a barrel, pumping up airline profits. And thanks to strict capacity discipline and full airplanes, U.S. carriers so far have not had to pass the benefits on to passengers in the form of lower prices.

So what will 2015 bring? The laws of supply and demand dictate that oil prices will eventually bottom out and rise again. But the recent relief is enabling the industry to start 2015 on a strong footing. 

► Aviation Week is approaching its 100th anniversary in 2016. In a series of blogs, our editors highlight editorial content from the magazine's long and rich history, including viewpoints from the industry's most iconic names and stories that have helped change the shape of the industry.