Airlines Unite! Act now!
 

Its about time for this.

An Open letter to All Airline Customers:
Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now. Visit www.StopOilSpeculationNow.com.
For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers.
Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.
Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.
The nation needs to pull together to reform the oil markets and solve this growing problem. We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.

Robert Fornaro
Chairman, President and CEO
AirTran Airways

Bill Ayer
Chairman, President and CEO
Alaska Airlines, Inc.

Gerard J. Arpey
Chairman, President and CEO
American Airlines, Inc.

Lawrence W. Kellner
Chairman and CEO
Continental Airlines, Inc.

Richard Anderson
CEO
Delta Air Lines, Inc.

Mark B. Dunkerley
President and CEO
Hawaiian Airlines, Inc.

Dave Barger
CEO
JetBlue Airways Corporation

Timothy E. Hoeksema
Chairman, President and CEO
Midwest Airlines

Douglas M. Steenland
President and CEO
Northwest Airlines, Inc.

Gary Kelly
Chairman and CEO
Southwest Airlines Co.

Glenn F. Tilton
Chairman, President and CEO
United Airlines, Inc.

Douglas Parker
Chairman and CEO
US Airways Group, Inc

Interesting that they didnt get any CEO's of Regional/Jet carriers to be signatories....

However, Its about time... the industry as a WHOLE needs to press this and other issues until something is done.

Amen brother! I went to the site, very user friendly, and sent the letters to my senators and congressman. It took two minutes, now if everyone we know could do that, maybe things will get better.

Unfortunately, I've come to understand that FORM letters do little, if anything, to prompt action by an elected official. The flip-side of that is sending personal, hand-written, mail. That type of mail is generally read by the elected official in question. BTW, all of them are questionable/suspect. :) I did, however, have a FORM letter sent to my Congressmen/women because I'm too darn lazy to write them a personal letter. :(

Just sent mine. Very quick and easy. The more the better. For once pilots and management both can agree on this issue. It's truly out of control.

Sent letters prior to this site and also did the form letter. Its very easy, i sent it to everyone i know.

I'll admit that I was surprised to see this letter from Airline mgmt. However, I am in agreement with them and promptly fired off the letter.

But there is something else WE all must do. Follow this up with your elected officials by monitoring their activity on this subject and send another e-mail with you approval of their action. Or if necessary send an e-mail stating your displeasure and that this will weigh heavily on your decision should they be seeking re-election. If feel that if enough people would respond in that manner they would take notice.

Too political? Sorry but this is affecting everyone.

There is speculation, and, what I believe, is the root cause OF speculation, or at least a big part of traders/hedge funds speculating on commodities:

Record oil prices tied to dollar depreciation

And secondly,

Oil Prices Up, Dollar Down - Coincidence?

It's all about the $$$$$$$$$$$$

its not any single 1 cause. Its a number of reasons.

Speculation = 30-40 dollars of the rise

dollar value = increased oil cost

supply and demand = increased oil cost

Speculation is easily the cause for 30-40 dollars extra cost on the price of a barrel of oil. Its also the easiest and quickest fix while the economy and industry have time to adjust.

There is a problem when even the Saudis are saying the price of a barrel of oil is over inflated.

Cutting speculation is the quickest "fix" in the short term. It would almost certainly bring the cost down by 30-40 bucks a barrel. That would allow the industry time to breath and adjust. Fuel jumping 100% is killing the airlines and the economy.

The problem is Speculation, Supply & Demand, and the value of the dollar.

This should be an eye opener for the entire country this is a problem. We need to be investing big time into alternative fuels and energy so we arent held hostage in the future when there really is a Shortage. This country has the technology to get find alternatives and ween ourselves off of foreign oil. We have the largest Coal shale deposits in the world and that can be converted into oil. We have oil here we arent drilling for and again we have alternative fuels on the horizon. There is already a synthetic Jet fuel out that should be being used or at least researched further.

But whatever you hear or believe, please remember that
There is no shortage...there is no shortage !!!!!!!
:eek:

whatever congress tries to do about speculation will not help. there's little if any evidence that speculation is causing the rise. uncertainty is causing the volatility - if anything, speculation adds to the liquidity in the market. for every "speculator" who "bets" on a price rise, there's someone (a "speculator," investor or oil producer) who "bets" the other side of the contract. it takes two to tango - the finger pointing at the speculators is way overblown.

congress can make an immediate impact by doing the following:

1. tear down the capital controls on foreign ownership of US airlines. fully opening up our domestic airline industry to foreign investment will immediately benefit the industry.

congress can make a positive and relatively short-run impact by doing the following:

2. review and revise permitting for petroleum refining operations - we haven't had a new refinery built here in decades; thus, we pay the transporation costs to import a great deal of our refined/distilled products - and expectations that these costs will rise exacerbate the crack spreads.

3. open up domestic energy production. this includes allowing drilling as well as tearing down barriers to nuke production.

congress can make a long run impact by doing the following:

4. support a foreign policy that favors freedom over tyranny. free nations simply don't (and have never) threatened one another with embargoes and supply shocks. while promoting freedom will result in accelerated world economic growth, thus increasing energy demand, free nations will also ensure a more stable supply.

The Fed needs to raise interest rates......

agreed - it'll be economically painful in the short term, but inflation is only prolonging the pain.

i have a hunch that if the fed had done it some time ago, we would have gotten some of the pain over with by now. it's like dying by a thousand paper cuts the way it's going now.

First off 70% of all oil trades is done by speculators up from 30% in recent years. Thus increasing the price. Demand hasnt gone up 100% in a year and the dollar hasnt raised oil prices by over 100% either. Speculation is part of the problem and there is proof of it whether you want to believe it or not. I have seen the presentations from people with your argument and the the others whom argue speculation is a problem. There definitely is evidence that part of the spike in oil prices is a result of speculation.

Also opening up an American Travel industry to foreign ownership is nothing more than selling more of our country to foreigners. Foreign ownership would be bad for our industry and our economy. We need to stop selling our country off piece by piece.

Can I call for a sticky on this...

What's a sticky? Stays stuck to the top? Good idea.

Anyone who thinks that speculation is not a huge part of this has money in the game or has been fed a bunch of bs from people with money in the game.

An Open Letter to All Airlines
By Bill Mann, Tim Hanson, Nate Weisshaar, and Joe Magyer July 10, 2008 Comments (6)

10 Recommendations

Dear CEOs of AirTran (NYSE: AAI), Alaska Airlines, AMR (NYSE: AMR), Continental Airlines (NYSE: CAL), Delta Airlines, Hawaiian Airlines, JetBlue (Nasdaq: JBLU), Midwest Airlines, Northwest Airlines, Southwest Airlines (NYSE: LUV), UAL (Nasdaq: UAUA), and US Airways (NYSE: LCC),

Thank you for your July 10 letter detailing the threat of rising oil prices to your businesses and our economy and for encouraging us to help you "Stop Oil Speculation Now." We have a few follow-up comments, questions, and suggestions.

First, we feel your pain. You have, historically, been a group of such well-run businesses that it's difficult to watch some of you pile up losses and flirt with bankruptcy. This is unprecedented in our economic history and the situation clearly requires urgent action.

Or not. Didn't Eastern Airlines collapse when oil was $12 per barrel? Come to think of it, U.S.-based airlines have eviscerated shareholder capital for decades. The Oracle of Omaha invested in U.S. Air one time, and has described the fact that he managed to make money as being indistinguishable from blind stinking luck (we're paraphrasing here). We even have a colleague who wrote recently that he wouldn't recommend airline stocks to his worst enemy.

So perhaps you shouldn't be blaming oil traders for your difficulties, but rather should focus on developing a robust, highly efficient industry based on the ideal of competition which ensures timely and enjoyable coast-to-coast (and even international) travel. That means, first and foremost, good service -- even for economy class passengers. After all, people will always need to travel. You might find out that airline passengers are more willing to pay up to fly (see the growth of a company like NetJets) when they know it won't be a dreadful experience.

But please let us know if your strategy works. We're pretty fed up with how the stock market has been declining recently. Perhaps we can convince Congress that the downturn threatens American savings and has been driven by "speculators" who are selling stocks without regard to their fundamental prospects and that we need regulations that will "Stop Stock Selling Now."

Yeah, that sounds like a foolproof solution.

Sincerely,

Us

Found at themotleyfool.com

We've hit peak oil, the changes we're seeing in the industry today are consistent w/ what would be expected w/ peak oil.

The CEOs could have done a better job of trying to mitigate the consequences of oil prices...what did they expect, for oil prices to stay flat? Now to try and soften the impact of their mismanagement, the CEOs have figured a form letter to Joe public will solicit change...fat chance.

This is probably the most pathetic thing I've seen from airline management so far. Probably concocted this plan while they were at the annual CEO get-together they have up in Wyoming each year.

Oh really i guess the numerous other countries that are also calling for an end to oil speculation are "pathetic" also?:cool:

http://www.riverfrontig.com/commenta...c/sv063008.pdf

Also today China announced they were going to export oil because they had to much. That should have dropped the price of oil today showing a decrease in demand in China, which is who the speculators like to blame for the Supply and Demand "issue", but instead Oil Spiked $5 dollars today on NOTHING. Speculators are trying to point fingers at anything but speculation to try and draw attention away from their greed.

This has alot more to do with speculation than some may want to admit.

Right on target Mr. Duke! Please prosecute those responsible for the speculation. Otherwise it sounds like whinning. Pathetic is an understatement and I am even wondering why my CEO signed on!:eek:

The U.S. government would not be pushing for the Saudis to pump more oil and for additional drilling of the OCS if speculation were the problem. In this debate, actions certainly speak more loudly than words, so far the central theme seems to be supply.

It's the Saudis who blame price on speculation...I don't trust the Saudis, I'm sorry. I feel that I have good reason not to trust their government and ther state oil company, ARAMCO.

I'd like to believe that speculation is the problem, but it clearly is not, at least based on the actions that we've seen so far.

The airlines have peaked in terms of size because of cheap oil...the pendulum is now swinging in the other direction, energy costs will stay expensive, it is now time for the airlines to downsize drastically by means of charging an equitable fare for their tickets. It's a tough pill to swallow, but this what we're going to see. Heck, we're seeing it already, why deny reality.

The Saudis are also saying speculation is running wild and that oil should be around $70 a barrel right now.

That is excactly what it is.

Speculation IS a big problem, and IS contributing to the high price of oil.

Oil should be around $60-70 a barrel right now and that includes supply & demand and the weak US dollar.

As to the CEOs of the airlines signing this, hey, they have a valid point, no matter how they may have "mismanaged" their respective company.

I wish just one of you had some clue as to how our markets work before you spew on here. Speculation is not the culprit in the rising cost of fuel. There are speculators on the futures market for just about every commodity that is sold in the U.S. If the price of oil was not going up, speculators would not buy futures at higher prices. When the price of oil dropped dramatically in the past, was that the speculators' fault too?

What you are asking here is for government to regulate the price of oil which is a global commodity. This is ignorant and just shows how little each of you know about how the market works. Democrats and media blaming speculators is just a way for them to seem like they are doing something without actually doing anything. Stopping the decline of the value of the dollar and putting more oil into production is the way to bring down the cost of oil. Futures markets just reflect the actual cost of the oil.

Maybe you can understand how many of you have no idea how free market economics works. Many of you guys were willing to speculate on your income by paying 70,000-100,000 for your ratings to fly airplanes. In the real market, all of you would be done trading on the futures markets because you can only make so many bad trades before you are out of money. In this case, you would find out that putting yourself that much in debt for the chance to be a regional pilot and make 20,000/year is a bad purchase on the market. Somebody sold you a really bad trade, and you lost. Now, if the oil speculators bought oil for as high as you paid for your ratings, they would all be in trouble because NOBODY would pay that much for a barrel of oil. So, they would be holding useless oil that cannot be sold for what they owe. They would have to sell for a loss, and most people cannot operate on a loss for long without going broke. SO, recognize that futures traders are only buying oil for what they believe will be paid on the open market. If the market does not bear the price, they will lose their shirt. THAT IS IT. They do not hold some secret power to raise the price.

The conspiracy theory is bunk. Quit making yourselves look dumb.

worth quoting.
Thank you, sir.

Good god people, remove head from anus.

CE

good analogy, milky!

i've said time and time again, i don't know if there's a "bubble" - my point is that it doesn't matter! just as pilots are free to speculate on future earnings when they leverage themselves heavily to get ratings, people ought to be free to leverage their funds in markets - be that housing, stocks, bonds or oil.

allowing increased foreign ownership of domestic carrier would allow an immediate capital infusion to many carriers to ride out tough times (and lean out for the good times). it would save a heck of a lot of jobs.

bbtp, crimson, and milky thank you for injecting a dose of intelligence and knowledge in an otherwise completely irrational debate. The level of economic education in this country is just abysmal. The masses are so easily swayed by specious arguments it's a wonder that we have any freedoms left.

Before you flame me super, our ceo's are not being irrational. Very vew corporate heads are free market economists. They see a chance to get some favorable government regulation so they go for it. That's partly why there are so many well paid lobbyists, to skew the markets in favor of one company or sector.

DRILL HERE, DRILL NOW, PAY LESS!!!!!

Yeah, the Saudis are speculating on how much we're willing to pay before we tap into the trillion barrels that we aren't allowed to drill for now.

Nothing is going to get better until there is a huge public outcry. The only way politicians will do anything is if they fear they will not get re-elected due to their actions or inactions.

We should join our truck driver brethren and make a march on capital hill. Have them blow those loud horns until it drives the city nuts.

As far as writing letters, everyone needs to write their elected representatives a certified letter. It requires a signature. If everyone would do this, it would bombard their office with tons of mail that requires signature. This would cause some attention as well.

Of course a transportation workers strike that would shut down the national transportation system would definately get attention. However, not everyone would get on board to do that.

On several occasions in the past few months, I have written about the impact of skyrocketing fuel prices on airline customers – in their daily lives and when they travel (Final Approach May 1 and Final Approach May 28 ). In the long run, to lower oil prices for all Americans, we need to increase domestic supply, increase exploration, alternative energy sources and conservation. However, one near-term solution to the problem is for government to investigate and rein in oil speculators.

What is the Commodities Market? – Commodities are raw materials purchased by manufacturers of finished products such as food manufacturers, oil refiners or builders. Businesses that are highly dependent on oil – refineries, heating oil dealers, airlines and trucking companies among others – lessen their risk of significant price fluctuations by purchasing future delivery contracts at predetermined prices in what is known as the commodities or futures markets. The two largest U.S. commodities markets or futures exchanges are the Chicago Mercantile Exchange and the New York Mercantile Exchange, where people trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity at a specified price with delivery set at a specified time in the future.

What is the Problem with Oil? – There is a significant disconnect between the paper market for oil (speculators) and the physical market for oil (consumers). In recent years, speculators have taken advantage of actual consumers of oil by bidding up the price for futures contracts. If a speculator purchases a contract for delivery of oil at a high price six or 12 months in the future but has no intention of actually taking delivery of the oil in that contract, then a physical customer who needs that oil – to deliver home heating oil, to operate trucks or airplanes, or even to process in a refinery – will be forced to pay the higher price in order to obtain the oil that is needed.

How Do They Get Away with That? – Increasingly, sophisticated institutional investors have managed to manipulate the rules and regulations governing commodities transactions through a series of exemptions and waivers, including the so-called “Enron loophole,” low margin requirements and the dodging of U.S. public disclosure requirements. These complex arrangements have a similar impact: They put people engaged in oil-related businesses at a disadvantage with those who gamble relatively small sums that the price of oil will increase out of proportion to marketplace demands. If that happens, as it has regularly over the past few years, those who need oil for their businesses pay a premium, which is passed on to you – the consumer.

What Can Government Do Now? – In the near term, Congress needs to address the impact of unchecked speculation in the commodities market. Commodities trading is overseen by a small, but very powerful government agency known as the Commodities Futures Trading Commission (CFTC) . Congress can require the CFTC to implement a host of controls such as imposing limits on the quantity of commodities contracts speculators may purchase, closing the loopholes that allow speculators to trade exempt from any government oversight or regulation, and requiring reporting by those who are engaging in speculation. Experts say that closing regulatory loopholes in the trading of commodity futures will result in a significant reduction in fuel prices.

What’s Next? – Congress is expected to debate some of these issues in the next few weeks and it is urgent that they hear your voice. To facilitate public participation in the debate over speculators, we have launched a broad-based coalition, S.O.S. NOW, that provides a wide array of information on speculation and its impact on the price we all pay for oil. S.O.S. NOW stands for Stop Oil Speculation Now, and we urge you to go to the Web site Stop Oil Speculation Now | S.O.S. NOW and send a message to Congress about oil speculation.

Sincerely,


James C. May
President and CEO
Air Transport Association

take 7 minutes out of your life to listen to this explanation on speculation.

YouTube - Oil speculation and oil prices

YouTube - Who's to blame for price of oil?

Even the Saudis are saying Speculation is in large part to blame.

http://www.youtube.com/watch?v=BA8AfcWkIc4

Of course the Saudis are going to blame everybody but themselves and OPEC...but hey, at least they let girls burn to death rather than let them be seen in public in their pajamas.

http://news.bbc.co.uk/2/hi/middle_east/1874471.stm

I'd be careful about quoting the Saudis. They are not your friend.

i agree, i used it as just one of the many references on speculators being a big part of the problem. Just trying to back up my opinions.

This is my first post. I am not an airline pilot, but my uncle is a Captain at AA. I do hold an IFR rating, but I am not current right now.

I own a small trucking company that has 3 trucks and trailers. I think the Trucking industry and the Airline Industry should come together and put a stop to the rampant oil speculation. We are the two biggest industries that this country depends on and the biggest fuel users.

Remember that if you got it, a truck brought it.

Thank you for letting me post this, as I enjoy reading the posts on this forum about career that once dreamed of having.

The purpose was to invoke a sense of apathy from the traveling public. You put "Chautauqua" on there, and they're going to start thinking this is for the benefit of Native Americans.

yep - setting the stage for the next major bk... "don't make us liquidate; it wasn't OUR fault!"

the website is pretty easy - i just used it to write my reps and ask that they lay off speculators...