It would be a perfect occasion for schandenfreude – that guilty sense of jubilation at another’s misfortune – if only the pain weren’t likely to be spread around.

The airline industry says soaring fuel costs are driving many carriers to despair, their best-laid business plans knocked off course by a “perfect storm” of triple-digit oil prices and an economic slowdown.

Some two dozen airlines have stopped flying in the past six months.

But their more “fortunate” peers, those who have managed to maintain altitude, have had to pull out all stops to remain viable in an industry where it’s not uncommon to devote a third of one’s budget (50% in the case of some low-cost carriers) to fuel.

In recent months, airlines have increased their fares, cut jobs, reduced capacity and routes and, in the case of American Airlines, even imposed a $15 surcharge to check a single item of baggage.

All in the name of squeezing greater efficiencies from a business model conceived in an era of cheap oil.

Many are now calling for governments to step in with some cash succour and for an easing of regulations that they see as overly cumbersome.

The International Air Transport Association, or IATA, an industry group that represents virtually all of the world’s international air traffic, warns that commercial aviation may be at a tipping point.

At a meeting in Istanbul this week, IATA said it’s now expecting an industry-wide loss of some 2.3 billion US dollars. And that’s the rosy scenario, one that presupposes oil will average 107 dollars a barrel. Losses could top 6 billion dollars if crude hovers around the 135-dollars-a-barrel record attained in late May.

The glum outlook contrasts with the industry’s recent signs of a turnaround following the drop in passenger traffic in the wake of the September 11, 2001 terror attacks.

In 2007, the industry posted a 5.6 billion dollar profit. And as recently as April, forecasts were for much of the same this year.

Normally, in a boom economy, raising prices might seem an obvious solution. And many airlines are doing just that. But in a faltering economy, price hikes – even relatively minor ones – can hit ticket sales hard.

According to the Wall Street Journal, the head of the IATA says that last year the airlines were able to pass on some 40% of their higher fuel costs to the flying public. This just isn’t possible in the current economic climate.

Meanwhile, airlines are reportedly expecting to face almost $100 billion in extra costs from oil over the next year.

Europe's biggest discount airline, Ryanair, said it expects to break even in 2009. But there’s a big caveat in that prognosis, since it depends on oil stabilizing at around 130 dollars a barrel. Given that the Wall Street investment bank Goldman Sachs recently predicted that oil could surge to 200 dollars a barrel within the next two years, 130 dollar oil seems anything but a foregone conclusion. And Ryanair itself recognizes the febrility of the oil market.

According to Bloomberg News, the Irish carrier has already factored into its yearly outlook a 5% increase in fares and oil at 130 dollars a barrel. Bloomberg's economists estimate that every 1 dollar increase in the price of oil above 64 dollars adds 14 million euros to Ryanair's annual operating costs.

Nonetheless, the airline is striking an upbeat tone.

"Higher oil prices will not mean an end to low-far air travel,” said Michael O'Leary, Ryanair’s chief executive, quoted by Bloomberg. “And a downturn in the industry provides enormous opportunity for airlines such as Ryanair.”

Bring on the schadenfreude.