New Delhi, (Agencies): The present political turmoil in Egypt and fears of a domino effect on other oil-producing countries in the region may lead to a sharp rise in the price of aviation fuel.

The turmoil has pushed the oil prices close to USD 100 a barrel and jet fuel to USD 113 a barrel, considerably higher than the USD 91 per barrel average for 2009.

Fuel accounts for 27 per cent of operating costs and a sustained rise in oil price could spoil the party. With uncertainties in the Middle East, oil prices are now hovering near the USD 100 per barrel mark. For every dollar increase in the average price of a barrel of oil over the year, airlines face the difficult task of recovering an additional USD 1.6 billion in costs, said Bisignani.

The expected demand for oil in 2011 has been revised up by the IEA to a strong three per cent increase on 2010 but inventories and OPEC spare capacity remains high unlike the 2008 situation, it said.

Yields had risen, providing some offset to fuel costs as load factors remain near record highs at 78 per cent.

IATA has predicted that though traffic volumes have slowed sharply recently still, after the strong 2010 rebound, the trend of growth is expected.