The party's over: end of cheap flights, says BA

Anyone else feel like we're balanced on the edge of a cliff right now, looking down? The head of British Airways, Willie Walsh, seems to, predicting rising oil prices will bring about the end of the 'cheap' flight extravaganza. Yesterday oil hit $135 / barrel, promoting Ministers to utter the word "crisis" in muted tones around the corridors of Whitehall.

Meanwhile aviation fuel is at $1,350 / tonne and rising, and US flagship American Airlines has started charging customers for breathing (well, for checking in luggage and stuff). Back in Blighty airline CEOs are studying bottom lines as never before, trying to squeeze those margins ever tighter. Self-appointed experts predict that we could be seeing bankrupt carriers by the end of the year, and profit warnings from many others.

Pinch of salt time people: the media and business (and environmentalists, let's be honest) are known to play things up to achieve an end. The press is pushing for a drop in fuel duty to save the "beleagured motorist", while the aviation industry wants some concessions on the Emissions Trading Scheme or the new tax to replace Air Passenger Duty. Harping on about the end of cheap flights will get the public all worked up and help them persuade Ministers to give them a break.

That's not to say the credit crunch / oil crisis / call-it-what-you-will won't affect the airline industry - it's clear that they've been operating on a defunct and unworkable business model, and the proverbial chickens are starting to return home. But I'd hold off the celebrations for now, lest the price drop back and the 'cheap' flight boom begin again with earnest.