International Air Transport Association figures show impact of high fuel on airline shares

Airlines have been facing an oil price storm this year. Photo / Getty Images

Investor worry over fuel prices knocked airline share prices by 10.1 per cent last month, their worst performance in two years.

While oil prices have since retreated, concern over the impact of the industry's biggest single cost led to the biggest global sell-off since June, 2016.

Air New Zealand's share price dropped by 8.2 per cent to end the month at $2.80 but it has since more than recovered lost ground, closing today at $3.10.

The drop was in line with airlines in this region. Shares in Europe were hit even harder, falling 11.5 per cent, according to figures released by the International Air Transport Association.

The global airline share price index fell by 19.8 per cent in the year to the end of October. Air NZ shares undershot this, falling 13.8 per cent.

Iata said share prices had been down 12.4 per cent on a year ago.

''The underperformance of airline shares relative to global equities over both periods reflects investor concerns about the impact of rising costs on airline financial performance.''

During October oil and jet fuel prices reach four-year highs during October and this week are still 8 per cent higher than at the same time last year.

Oil hit a peak of US$69 a barrel in early October.

Iata said across the industry net post tax profits were $1.2 billion lower in the third quarter of this year, compared to last year as margins shrank.

The gap between premium and economy cabin yields which started to widen in around the middle of last year has persisted in the latest monthly data.

Yield in premium cabins - which account for 5.1 per cent of traffic but nearly 30 per cent of revenue - are now 3 per cent higher than a year ago.

Capacity is also growing, up 5 per cent in September compared to a year ago, and demand is continuing to trend up at a slightly faster rate.