The Silent Killer: Foreign exchange volatility inflicting revenue and cost pain across the industry

For one airline after another—in geographies as diverse as Brazil and Australia, India and Hawaii, Japan and Europe—a silent killer is on the loose. This time it’s not fuel, the global market for which is actually softening. It’s not a demand shock—not with worldwide traffic still growing at a healthy pace. Nor labor costs, which are falling in many markets as carriers restructure. Nor distribution costs, for which technology and innovation are driving down prices. Airplanes and airports are becoming more efficient too. So what is this mysterious force that’s causing so much grief for so many carriers?