mvscal, help me out here ...

[RadioFan]

Turbulence aloft

Airlines have announced reductions of 13 flights a day at Tulsa International Airport. An industry official predicts a loss of 20 to 30 more flights by fall.

Analysts say rising fuel costs could cause big headaches for airlines

By D.R. STEWART
World Staff Writer

U.S. airlines, now in a crisis because of jet fuel prices that have risen 100 percent in the past 18 months, may be headed toward a catastrophe, industry analysts and executives say.

Although the major air carriers, including American Airlines, which employs 7,000 people in Tulsa, have announced seating capacity cutbacks of up to 14 percent this fall and have raised fares and fees, it won't be enough if oil prices stay at present levels, officials said.

"It's the worst industry crisis since 9/11," said Alex Eaton, president of Tulsa's World Travel Service, Oklahoma's largest travel agency. "But this fuel issue isn't one that can be remedied by getting people to want to travel again.

"Short of the government stepping in, in one form or another, the industry will absolutely be transformed. There's no question you're going to see bankruptcies in the first quarter next year if nothing changes."

At Tulsa International Airport, which has 81 departing flights a day, airlines have announced reductions of 13 flights a day, or 16 percent, said Airports Director Jeff Mulder.

"I haven't heard anything from American Airlines, United, Northwest and Delta," Mulder said. "We expect we will have additional cuts."

An industry official, who didn't want to be quoted, said Tulsa could lose 20 to 30 flights — 25 percent to 37 percent of its air service — this fall.

But Bob Ball isn't so sure.

Chief economist at the Tulsa Metro Chamber, Ball says not to underestimate the strengths of the local energy, heavy machinery and capital goods economies.

"Durable and capital goods products are in strong demand around the world," Ball said. "The dollar is very favorably priced on the exchange markets, which makes our products favorably priced. There's a lot going on that counters the negative impacts of fuel costs and constraints on air travel.

"We have so much commerce coming in and out of here."

But if fuel prices soar and the airline industry sours, as some think it could, Tulsa's relative prosperity will only postpone the reckoning, some industry analysts say.

In "Oil Prices and the Looming U.S. Aviation Industry Catastrophe: A Hole in the Transport Grid," a study released earlier this month by the Business Travel Coalition and AirlineForecasts LLC, researchers conclude that if oil stays close to $130 a barrel, all major U.S. airlines will be in default on debt covenants by the end of this year or early 2009.

"The implication is that several large and small airlines will ultimately end up in bankruptcy, and of those, some will be forced to liquidate," the study concludes. "While economic theory suggests higher and unsustainable fuel costs will lead to a smaller industry, it does not necessarily follow that the industry will reach its smaller size before collapsing along the way under the weight of higher fuel prices.

"With oil prices in the $135 range, the airline industry could be forced to park upwards of 1,000 aircraft and shed more than 80,000 employees, and still not return to health."

The U.S. airline industry employs 420,000 people today. Thousands more are employed by companies that sell services and products to the airlines.

"If the airline industry craters, it's going to ripple across our local economy," Eaton said. "An argument can be made that the national air transportation system needs to be subsidized in some form because it's so critical to the national economy. I think some sort of government intervention at this point is critical."

Calling on Congress


During the past two weeks, a range of organizations, including the American Trucking Association, the Consumer Federation of America, the National Farmers Union, the Petroleum Marketers Association of America and the Air Transport Association, the trade group representing the airlines, called on Congress to rein in rampant speculation in the energy commodities markets.

James C. May, CEO of the Air Transport Association of America, testified Tuesday before the Senate Committee on Agriculture, Nutrition and Forestry and the Appropriations Subcommittee on Financial Services and General Government.

"Leading economic and commodities experts around the world believe crude oil prices today are unnecessarily high and distorted due, in large part, to market manipulation and excessive speculation," May testified. "We are asking for Congress to take steps now — not 60 to 90 days from now — to totally close the loopholes and make the market more transparent and balanced.".


Thin margins


Few industries are as transparent as the airline industry, where the Internet permits consumers to compare airfares industrywide. Competition often prevents carriers from raising fares.

Mike Boyd, president of the Boyd Group, an airline analyst in Evergreen, Colo., said the average fare paid by a domestic traveler today is $191. Remove taxes and fees and the airline ends up with $166.17 in revenue per domestic passenger.

At existing fuel prices, the cost of fuel per passenger is $138.80, the analyst said.

"Net to the airline to pay for everything else: $27.37," Boyd wrote last week in his "Aviation Insight & Perspectives."

That thin margin must cover expenses including crews, maintenance, in-flight supplies and landing fees.

"Addressing this cost crisis with soft drink fees, hawking potato chips and peanuts, charging for luggage and other nickel-and-dime moves, without other fundamental structural operational changes, is by itself no different than using a mattress as protection from an A-bomb," Boyd said.

Fred Russell, CEO of Fredric E. Russell Investment Management Co. in Tulsa, said the airline industry appears to be without an exit from its predicament. But the government could help, he said.

"The industry requires huge capital expenditures, has lots of debt and is labor intensive," Russell said. "Those three factors are a poor prescription for health."

The government could help the airlines, Russell said, by repealing the regulation prohibiting foreign investors or airlines from owning more than 25 percent of a U.S. carrier.

"Open up the skies," Russell said. "U.S. airlines need more capital, more (fuel efficient) planes and more profitable route systems. Even though many major airlines have huge debt and fuel problems, they still have some powerful brand names, gates and very attractive routes.

"They could be very attractive to foreign airlines or investors." (my bold here, the rest are subheads, in the Tulsa World)

----------------------------------------------

So let's get this straight. Foreign investors now want to take over the airlines?

No problem here, as long as we keep security in check, correct?



http://www.theoneboard.com/board/viewto ... 11&t=14262" onclick="window.open(this.href);return false;

[Wolfman]

I booked our flights on Delta for October to Buffalo and back last month and already have a schedule change.
It would not surprise me if more happen between now and then. I guess you have to do whatever it takes to keep your
costs low so the consumer will continue buying your product/service.

[fix]

Mike Boyd, president of the Boyd Group, an airline analyst in Evergreen, Colo., said the average fare paid by a domestic traveler today is $191. Remove taxes and fees and the airline ends up with $166.17 in revenue per domestic passenger.

At existing fuel prices, the cost of fuel per passenger is $138.80, the analyst said.

"Net to the airline to pay for everything else: $27.37," Boyd wrote last week in his "Aviation Insight & Perspectives."

That thin margin must cover expenses including crews, maintenance, in-flight supplies and landing fees

I can't speak with any certainty for the airline industry but I can speak for the trucking industry that when costs are being cut, maintenance is usually the one which gets extended or neglected.

Patch work instead of proper repair becomes much more prevalent.

Feeling safe flying on a patched plane?

Calling on Congress


During the past two weeks, a range of organizations, including the American Trucking Association, the Consumer Federation of America, the National Farmers Union, the Petroleum Marketers Association of America and the Air Transport Association, the trade group representing the airlines, called on Congress to rein in rampant speculation in the energy commodities markets.

James C. May, CEO of the Air Transport Association of America, testified Tuesday before the Senate Committee on Agriculture, Nutrition and Forestry and the Appropriations Subcommittee on Financial Services and General Government.

"Leading economic and commodities experts around the world believe crude oil prices today are unnecessarily high and distorted due, in large part, to market manipulation and excessive speculation," May testified. "We are asking for Congress to take steps now — not 60 to 90 days from now — to totally close the loopholes and make the market more transparent and balanced.".

They're right, it absolutely must be done now. The entire transportation sector can't survive long term, with the prices of oil today.

[RadioFan]

So let's get this straight. Foreign investors now want to take over the airlines?

So what? If they want to waste their money that's their problem.

Fair enough. We've been down this road before.

[Left Seater]

Good luck in getting Congress to change the laws allowing overseas ownership. Hell, you can't even travel on a non US airline within the US even when other flights are canceled or delayed.

Last year CO and AA had canceled a number of flights between IAH and Chicago. British Airways had a flight IAH ORD LHR. CO couldn't put me on the BA flight to Chicago because that violated US rules.

[Goober McTuber]

Good luck in getting Congress to change the laws allowing overseas ownership. Hell, you can't even travel on a non US airline within the US even when other flights are canceled or delayed.

Last year CO and AA had canceled a number of flights between IAH and Chicago. British Airways had a flight IAH ORD LHR. CO couldn't put me on the BA flight to Chicago because that violated US rules.

TRS.

[Left Seater]

TRS.

Sorry, have no idea what that stands for.

[Dinsdale]

They're right, it absolutely must be done now. The entire transportation sector can't survive long term, with the prices of oil today.

Uhm, no.


Earth to liberals, earth to liberals...

is this thing on?


Yup, that's a realistic scenario, alright.

Because once trucking/shipping gets too expensive, we'll all just sit back and starve to death.

Yup.


Or, maybe not...

Maybe with outrageous consumer-end prices because of shipping expenses, food and basic needs type stuff will switch back to a more locally-based infrastructure... you know, kinda like the way humans did things for a thousands and thousands of years...

Which reduces the demand for petroleum...

Which leads to a dropping petroleum market?


Gee, ya'think?

Maybe the free market will dictate what happens, like it has UNIVERSALLY, WITHOUT EXCEPTION, for thousands of years, regardless of attempts to manipulate it?


To some, they see this as the "energy/oil 'crisis' ." Enterprising people will see it as "opportunity."

The free-market is in an out-of-whack phase. You people not standing up against neo-environmentalism (I'm a tree-hugger, but about 98% of all "environmentalism" these days either does nothing for the environment, or harms it... nice job laying back and taking your buttfucking on the ethanol thing-btw) have enabled what happened. But no one wants to buckle down.

But eventually (probably sooner than most think), demand will lessen significatly. It's already dropped quite a bit, and continues to do so... Economics 101. As it drops, the Speculators that are causing this spike are going to be left holding some grossly overpriced futures, and are going to take possibly the largest financial beating in human history. Then, guess what? They're now out of the oil-speculation business, and everyone else will see their mistake and not do something that foolish in the future.


Laws that attempt to override the free market will ALWAYS fail eventually, usually after creating some very nasty unintended consequences (like stupid fucking ethanol mandates).

[Goober McTuber]

TRS.

Sorry, have no idea what that stands for.

That Really Sucks.

Sincerely,

CO, IAH, LHR and BA

[Tom In VA]

They're right, it absolutely must be done now. The entire transportation sector can't survive long term, with the prices of oil today.

Uhm, no.


Earth to liberals, earth to liberals...

is this thing on?


Yup, that's a realistic scenario, alright.

Because once trucking/shipping gets too expensive, we'll all just sit back and starve to death.

Yup.


Or, maybe not...

Maybe with outrageous consumer-end prices because of shipping expenses, food and basic needs type stuff will switch back to a more locally-based infrastructure... you know, kinda like the way humans did things for a thousands and thousands of years...

Which reduces the demand for petroleum...

Which leads to a dropping petroleum market?


Gee, ya'think?

Maybe the free market will dictate what happens, like it has UNIVERSALLY, WITHOUT EXCEPTION, for thousands of years, regardless of attempts to manipulate it?


To some, they see this as the "energy/oil 'crisis' ." Enterprising people will see it as "opportunity."

The free-market is in an out-of-whack phase. You people not standing up against neo-environmentalism (I'm a tree-hugger, but about 98% of all "environmentalism" these days either does nothing for the environment, or harms it... nice job laying back and taking your buttfucking on the ethanol thing-btw) have enabled what happened. But no one wants to buckle down.

But eventually (probably sooner than most think), demand will lessen significatly. It's already dropped quite a bit, and continues to do so... Economics 101. As it drops, the Speculators that are causing this spike are going to be left holding some grossly overpriced futures, and are going to take possibly the largest financial beating in human history. Then, guess what? They're now out of the oil-speculation business, and everyone else will see their mistake and not do something that foolish in the future.


Laws that attempt to override the free market will ALWAYS fail eventually, usually after creating some very nasty unintended consequences (like stupid fucking ethanol mandates).

Nice take.

[fix]

All well and good in your hypothesis Dins and I'd like to think you might be right.
In fact as far as foods go, your idea makes good sense and could easily be done by most everyone that was willing to sacrifice a bit and maybe pay a bit more for something grown locally. Of course for some, certain items just can't be produced locally because of their climate.
And even those locally produced goods still need to get to market somehow...


But for everything else that people today require to survive, you know, necessities such as that brand new big screen or the latest video game, phone, ipod, bottles for the beer, medical equipment, parts for your cars, planes, trains etc... I just can't see corporate America deciding that those jobs they've shipped off to Mexico, China and other low wage countries should come back home.
Something about cutting into their bottom line...

I'm betting that there's not too many out there willing to live like an Amish...

To some, they see this as the "energy/oil 'crisis' ." Enterprising people will see it as "opportunity."

Absolutely, the price for used trucks and trailers has crashed to unbelieveably cheap prices now.
With so many repos and bankruptcies going on, there's a glut of equipment out there for someone with the capital and the balls to take a chance that it's going to rebound sooner rather than later.
The only problem is, that means it's just that many more trucks who's tanks have to be filled at the current high dollar prices...
And that many more customers for those trucks to provide service to who potentially could end up stiffing you for the bill when they too go bankrupt on you..
There's a lot of that going on these days...

More than 900 trucking companies filed for bankruptcy between January and March of 2008. That’s 2% of the nation’s industry. Fuel prices are driving the companies out of business. A fill-up now costs around $1,200. Last year at this time, the price was around $700 to fuel up two 130 gallon tanks.

Trucks haul about 75% of all freight, and consumer costs have not risen quickly enough to offset high diesel prices. More bankruptcies can be expected. The trucking industry spent $112 billion on fuel in 2007 and is expected to spend $154 billion this year.

[smackaholic]

They're right, it absolutely must be done now. The entire transportation sector can't survive long term, with the prices of oil today.

Uhm, no.


Earth to liberals, earth to liberals...

is this thing on?


Yup, that's a realistic scenario, alright.

Because once trucking/shipping gets too expensive, we'll all just sit back and starve to death.

Yup.


Or, maybe not...

Maybe with outrageous consumer-end prices because of shipping expenses, food and basic needs type stuff will switch back to a more locally-based infrastructure... you know, kinda like the way humans did things for a thousands and thousands of years...

Which reduces the demand for petroleum...

Which leads to a dropping petroleum market?


Gee, ya'think?

Maybe the free market will dictate what happens, like it has UNIVERSALLY, WITHOUT EXCEPTION, for thousands of years, regardless of attempts to manipulate it?


To some, they see this as the "energy/oil 'crisis' ." Enterprising people will see it as "opportunity."

The free-market is in an out-of-whack phase. You people not standing up against neo-environmentalism (I'm a tree-hugger, but about 98% of all "environmentalism" these days either does nothing for the environment, or harms it... nice job laying back and taking your buttfucking on the ethanol thing-btw) have enabled what happened. But no one wants to buckle down.

But eventually (probably sooner than most think), demand will lessen significatly. It's already dropped quite a bit, and continues to do so... Economics 101. As it drops, the Speculators that are causing this spike are going to be left holding some grossly overpriced futures, and are going to take possibly the largest financial beating in human history. Then, guess what? They're now out of the oil-speculation business, and everyone else will see their mistake and not do something that foolish in the future.


Laws that attempt to override the free market will ALWAYS fail eventually, usually after creating some very nasty unintended consequences (like stupid fucking ethanol mandates).

Wait a minute now. Let's see if I get this right. Are you saying that when something gets expensive, folks will get by with less of it? And then.....the price will go down?

That's crazy talk. Everybody knows that big oil....and chenron burton.....and ...uhhh....the jews... won't let that happen. They will just keep squeezing us and we will just do without everything else...cause...we're americans....and it's our constitutional right to use as much gas as we want.