U.S. April jet fuel demand lowest in 5 years - API

By Tom Doggett

WASHINGTON, May 14 (Reuters) - U.S. jet fuel demand in April fell to the lowest level for the month in five years, after three small airlines ceased operations and thousands of flights at other carriers were canceled for safety reasons, the American Petroleum Institute said on Wednesday.

Jet fuel use averaged 1.549 million barrels per day -- down 6.2 percent, or 102,000 bpd, from a year earlier. It was the largest yearly decline since December 2006.

In addition, it was the sixth straight month that fuel use was lower from a year earlier and the weakest April for jet fuel consumption since 2003, the trade group said in its monthly oil demand report.

"The large decline from last April likely reflects the cancellations of several thousand regularly scheduled flights early in the month as increased regulatory scrutiny of safety records followed the announcement of a large fine for a major airline for missed inspections early in March," the API said.

Southwest Airlines Co (LUV.N: Quote, Profile, Research) was fined a record $10.2 million by the Federal Aviation Administration in March for missing certain safety inspections, resulting in groundings of older model Boeing Co (BA.N: Quote, Profile, Research) 737 jets.

Stepped up FAA oversight in response to the Southwest lapse and congressional pressure resulted in groundings of MD-80 jetliners and canceled flights at American Airlines, a unit of AMR Corp (AMR.N: Quote, Profile, Research), Delta Air Lines (DAL.N: Quote, Profile, Research) and other carriers over the next several weeks.

The trade group said the suspension of operations by Skybus Airlines, Champion Air and ATA Airlines in April, along with skyrocketing fuel prices, also helped push down jet fuel demand for the month.

The average price for jet fuel was a record $3.43 a gallon in April, up 67 percent from a year earlier and more than double the price from April 2005, the API said.