IF oil stays at $75 or goes higher...
04-24-2006, 05:10 PM
#1
Fun Officer
Thread Starter
Joined APC: Feb 2005
Position: Dallas, Texas
Posts: 515
IF oil stays at $75 or goes higher...
from Michael Boyd:
If oil stays at $75, or goes higher, we can expect some very fast moves by the airline industry:
Fares: No More Testing The Waters. Whether it's via a $20 fuel surcharge, an across-the-board fare hike, a juggling of fare buckets, or a combination of the above, air fares will be jacked up materially.
Traffic: Strong Economy Or Not, It'll Head Down. Keep in mind that as airlines find it imperative to raise fares, gasoline prices will go up, too. That means less disposable income to take the kids on a vacation to see grandma. Less in the travel budget at businesses. So, demand will drop - albeit unevenly by region and by market - and carriers will find it necessary to slash capacity. That's hard to do when you've got a bunch of new airplanes on hard order. Easier to do when you have a static fleet, and the ability to park some birds in the sun.
Fleets: Call Your Realtor At Coolidge, AZ. Desert space will be at a premium for airplane parking, as carriers cut back capacity. Carriers in the best shape, at least fleet-wise: Northwest, with a flock of DC-9s that can be easily parked and have little or no debt service. American: a large fleet of MD-80s that can be parked, aircraft rental costs notwithstanding. Delta: it has plenty of excess RJ lift that can come out, and, possibly, dumped under Chapter 11. Airlines in more difficult shape: those that a) have lots of new airplanes on order, and b) are focused on a plan that's predicated on domestic traffic growth to carry the day. Draw your own conclusions regarding who's who.
Labor: Already Pretty Much Bled Dry. Unlike in the past, labor cuts are not going to be in the cards, except possibly at Southwest, and - as if it matters - at some "incremental lift re-sellers," a.k.a, small jet providers, a.k.a. regional airlines. This latter segment will be hit very hard, as the ability to generate sufficient revenues with high-cost 50-seaters will be even more dicey.
Rural Air Service: The Bar Is Going Up. The costs to access the incremental revenues at smaller airports are going to go up astronomically. That means that the ability of some communities to continue to support air service will be torpedoed
If oil stays at $75, or goes higher, we can expect some very fast moves by the airline industry:
Fares: No More Testing The Waters. Whether it's via a $20 fuel surcharge, an across-the-board fare hike, a juggling of fare buckets, or a combination of the above, air fares will be jacked up materially.
Traffic: Strong Economy Or Not, It'll Head Down. Keep in mind that as airlines find it imperative to raise fares, gasoline prices will go up, too. That means less disposable income to take the kids on a vacation to see grandma. Less in the travel budget at businesses. So, demand will drop - albeit unevenly by region and by market - and carriers will find it necessary to slash capacity. That's hard to do when you've got a bunch of new airplanes on hard order. Easier to do when you have a static fleet, and the ability to park some birds in the sun.
Fleets: Call Your Realtor At Coolidge, AZ. Desert space will be at a premium for airplane parking, as carriers cut back capacity. Carriers in the best shape, at least fleet-wise: Northwest, with a flock of DC-9s that can be easily parked and have little or no debt service. American: a large fleet of MD-80s that can be parked, aircraft rental costs notwithstanding. Delta: it has plenty of excess RJ lift that can come out, and, possibly, dumped under Chapter 11. Airlines in more difficult shape: those that a) have lots of new airplanes on order, and b) are focused on a plan that's predicated on domestic traffic growth to carry the day. Draw your own conclusions regarding who's who.
Labor: Already Pretty Much Bled Dry. Unlike in the past, labor cuts are not going to be in the cards, except possibly at Southwest, and - as if it matters - at some "incremental lift re-sellers," a.k.a, small jet providers, a.k.a. regional airlines. This latter segment will be hit very hard, as the ability to generate sufficient revenues with high-cost 50-seaters will be even more dicey.
Rural Air Service: The Bar Is Going Up. The costs to access the incremental revenues at smaller airports are going to go up astronomically. That means that the ability of some communities to continue to support air service will be torpedoed
04-24-2006, 09:12 PM
#6
AAmerican Way for AA Pay
Joined APC: Oct 2005
Position: B-737 Pilot
Posts: 1,617
Originally Posted by contrails
At some point though, if oil was at $150 a barrel and it cost $1,000 to go coast to coast, people would not be going on pleasure travel trips as much.
Not so long ago, it DID cost $1000 to go coast-to-coast.
Like it or not, airlines are not non-profit organizations. They cannot put out a product (seats from A to B) at below cost and survive.
Instead of passing along higher fuel costs to employees salaries, they absolutely MUST pass along these costs on to the consumer/buyer/flyer, in the form of higher airfares.
In short, it SHOULD cost $1000 to fly coast-to-coast, if that is what the airlines' product costs them to produce.
04-24-2006, 09:59 PM
#7
Gets Weekends Off
Joined APC: Apr 2006
Posts: 164
Originally Posted by RockBottom
from Michael Boyd:
If oil stays at $75, or goes higher, we can expect some very fast moves by the airline industry:
Fares: No More Testing The Waters. Whether it's via a $20 fuel surcharge, an across-the-board fare hike, a juggling of fare buckets, or a combination of the above, air fares will be jacked up materially.
Traffic: Strong Economy Or Not, It'll Head Down. Keep in mind that as airlines find it imperative to raise fares, gasoline prices will go up, too. That means less disposable income to take the kids on a vacation to see grandma. Less in the travel budget at businesses. So, demand will drop - albeit unevenly by region and by market - and carriers will find it necessary to slash capacity. That's hard to do when you've got a bunch of new airplanes on hard order. Easier to do when you have a static fleet, and the ability to park some birds in the sun.
Fleets: Call Your Realtor At Coolidge, AZ. Desert space will be at a premium for airplane parking, as carriers cut back capacity. Carriers in the best shape, at least fleet-wise: Northwest, with a flock of DC-9s that can be easily parked and have little or no debt service. American: a large fleet of MD-80s that can be parked, aircraft rental costs notwithstanding. Delta: it has plenty of excess RJ lift that can come out, and, possibly, dumped under Chapter 11. Airlines in more difficult shape: those that a) have lots of new airplanes on order, and b) are focused on a plan that's predicated on domestic traffic growth to carry the day. Draw your own conclusions regarding who's who.
Labor: Already Pretty Much Bled Dry. Unlike in the past, labor cuts are not going to be in the cards, except possibly at Southwest, and - as if it matters - at some "incremental lift re-sellers," a.k.a, small jet providers, a.k.a. regional airlines. This latter segment will be hit very hard, as the ability to generate sufficient revenues with high-cost 50-seaters will be even more dicey.
Rural Air Service: The Bar Is Going Up. The costs to access the incremental revenues at smaller airports are going to go up astronomically. That means that the ability of some communities to continue to support air service will be torpedoed
If oil stays at $75, or goes higher, we can expect some very fast moves by the airline industry:
Fares: No More Testing The Waters. Whether it's via a $20 fuel surcharge, an across-the-board fare hike, a juggling of fare buckets, or a combination of the above, air fares will be jacked up materially.
Traffic: Strong Economy Or Not, It'll Head Down. Keep in mind that as airlines find it imperative to raise fares, gasoline prices will go up, too. That means less disposable income to take the kids on a vacation to see grandma. Less in the travel budget at businesses. So, demand will drop - albeit unevenly by region and by market - and carriers will find it necessary to slash capacity. That's hard to do when you've got a bunch of new airplanes on hard order. Easier to do when you have a static fleet, and the ability to park some birds in the sun.
Fleets: Call Your Realtor At Coolidge, AZ. Desert space will be at a premium for airplane parking, as carriers cut back capacity. Carriers in the best shape, at least fleet-wise: Northwest, with a flock of DC-9s that can be easily parked and have little or no debt service. American: a large fleet of MD-80s that can be parked, aircraft rental costs notwithstanding. Delta: it has plenty of excess RJ lift that can come out, and, possibly, dumped under Chapter 11. Airlines in more difficult shape: those that a) have lots of new airplanes on order, and b) are focused on a plan that's predicated on domestic traffic growth to carry the day. Draw your own conclusions regarding who's who.
Labor: Already Pretty Much Bled Dry. Unlike in the past, labor cuts are not going to be in the cards, except possibly at Southwest, and - as if it matters - at some "incremental lift re-sellers," a.k.a, small jet providers, a.k.a. regional airlines. This latter segment will be hit very hard, as the ability to generate sufficient revenues with high-cost 50-seaters will be even more dicey.
Rural Air Service: The Bar Is Going Up. The costs to access the incremental revenues at smaller airports are going to go up astronomically. That means that the ability of some communities to continue to support air service will be torpedoed
04-25-2006, 10:53 AM
#8
Big Poppa
Joined APC: Apr 2006
Posts: 613
I also disagree that traffic will go down. Air travel isn't that much more expensive than road travel if you think about it. A mooney burns about 15 gallons an hour, but it can go about 250 miles in that hour. that's 16.6 miles a gallon. about the same as most SUV's and Pickups on the road today. and you get there ALOT quicker, with only paying about $1.5 more a gallon for aviation fuel, and having the pleasure of flying there!! If anything, I think the traffic will increase, because even if the airlines raise prices, it will still save lots of time, and money. From atlanta to new york and back to atlanta driving is 1760 miles. in a car with 20 mpg, that's 88 gallons, at $3/gal it's $264 in fuel alone. not to mention 25 hours of driving, and eating. you can get a round trip ticket for atlanta/new york for about the same price, plus they give you peanuts and a sprite, and it takes about 4 hours instead of 25. I don't see air travel being taken down too much because of this. Now, another terrorist attack is a different story, let's just all hope and pray.
04-25-2006, 10:55 AM
#9
Banned
Joined APC: Apr 2006
Position: FO dhc-6
Posts: 523
it doesnt need to cost 1,000 dollars to go coast to coast, bump everything up 10% instead of charging 300, charge 330. Instead of 120 down to florida charge 135, flying would still be very cheap compared to 10 years ago yet not out of the everyday workers reach
I cant believe the million dollar CEO's cant figure this out for themselves.
I cant believe the million dollar CEO's cant figure this out for themselves.
04-25-2006, 11:13 AM
#10
Line Holder
Joined APC: Apr 2006
Position: 737 F/O
Posts: 54
Originally Posted by hatetobreakit2u
I cant believe the million dollar CEO's cant figure this out for themselves.
Once managements industry-wide have squeezed every dime out of creditors, vendors, lessors, and labor, they will then begin to 'right-price' their product and continue to 'right-size' their airlines.
This thread is interesting, but just imagine Iran lobbing a bomb over into Baghdad or Jerusalem... How will the world look when oil is $400.00 a barrel?
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