Scotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3 Posted (9 years 2 months 1 week 6 days 17 hours ago) and read 2060 times:
With oil breaching the $50/barrel mark and more than likely to hit $51 soon, at what point do LCC's start to implement some sort of "fuel surcharge"? I know the majors have tried to implement some sort of surcharge but have backed off because no-one followed suit.
Here and in Asia a few airlines have implemented a fuel surcharge but I cannot remember any US carrier sticking with it. Also, are "state-owned" airlines "immune" to the price of oil and hence jet-fuel because their governments pick up the tab?
I am aware that there is a lot of hedging by airlines, but I would think the longer oil is way over $45/barrel it has to start hurting everyone at some point, especially carriers like US & UA which do not have the funds to do any hedging.
Hz747300 From Hong Kong, joined Mar 2004, 1629 posts, RR: 1 Reply 1, posted (9 years 2 months 1 week 6 days 15 hours ago) and read 2030 times:
I think that depends on how well they hedged the price of oil. If they used futures to contain the cost of oil, they should in turn pass that savings on to the consumer, which in most cases they have. Stated more simply, if they start losing money they will add a surcharge, they are not going to lose money just to be nice.
What's funny with the price of oil, is that if you factor inflation and trend the "real" price oil (less inflation)--it is still below its average price since 1971. So as the price of oil rises and seemingly nothing can halt it, the reason the price could be going up, is because it needs to.
Jacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 61 Reply 2, posted (9 years 2 months 1 week 6 days 15 hours ago) and read 2020 times:
As I said in an earlier post, it depends on where the carriers hedge their oil...from what I remember, WN is hedged for this year in the $20's and UA hasn't done any hedging............I do no know about the others.......
I think when WN/B6 add a fuel surcharge, then it will stick...hopefully they will do it soon.........
Ken777 From United States of America, joined Mar 2004, 7849 posts, RR: 8 Reply 3, posted (9 years 2 months 1 week 6 days 15 hours ago) and read 2007 times:
The price of oil, adjusted for inflation, may be below the average price since 1971 but the price of most tickets are far lower than they were in those days. That's where the real problem lies.
As for the airlines, the task now is to work out what they will do when oil stays at $50 or goes to $60. Hedging can only last for so long and this is going to impact everything from aircraft retained (or purchased) to what routes they are going to fly.
Boeing7E7 From , joined Dec 1969, posts, RR: Reply 4, posted (9 years 2 months 1 week 6 days 15 hours ago) and read 1991 times:
Gas is up $.20 a gallon on airlines. Everyone is starting to take it in the rear. Time for new fuel efficient "right capacity" birds, not some 555 passenger 3,000 gallon an hour hunk of crap from Airbus.
TomFoolery From Austria, joined Jan 2004, 512 posts, RR: 2 Reply 7, posted (9 years 2 months 1 week 6 days 14 hours ago) and read 1964 times:
I'm waiting for the post titled
"XYZ airlines crew passes the hat for gas money..."
It's just a matter of time before someone cracks and starts some new bull$hit fee to pay for fuel. "Boarding Fee", or "Check-in fees" (the latter is likely sooner rather than later). When was the last you ever saw a fee rescended?
Did they ever rescend the fuel surcharges implimented in 2000? (US, UA, DL, CO) I dont know that the European carriers or other international carriers put this in place as the Washington Post tends to forget that unless we have a war therer, the rest of the world doesnt really exist.
Udo From , joined Dec 1969, posts, RR: Reply 9, posted (9 years 2 months 1 week 6 days 13 hours ago) and read 1946 times:
"Gas is up $.20 a gallon on airlines. Everyone is starting to take it in the rear. Time for new fuel efficient "right capacity" birds, not some 555 passenger 3,000 gallon an hour hunk of crap from Airbus."
Never had such a laugh after reading that kind of b...! It's not the total amount of gas consumed per hour which counts, but it depends on the average amount of gas consumed per passenger. So the more people are on one plane, the more fuel efficient it is.
The A380 will be offering 20% lower operating costs than the B747...I think it's exactly the way to go in the future.
And before blaming Airbus for building a fuel efficient aircraft (which will in total reduce fuel consume per passenger), some Americans should go to their garage and think about the appropriate size of their cars. Fuel guzzling SUVs and other trucks or other crap are much more a problem today, not airliners.
Moman From United States of America, joined Aug 2004, 1049 posts, RR: 4 Reply 10, posted (9 years 2 months 1 week 6 days 13 hours ago) and read 1943 times:
"And before blaming Airbus for building a fuel efficient aircraft (which will in total reduce fuel consume per passenger), some Americans should go to their garage and think about the appropriate size of their cars. Fuel guzzling SUVs and other trucks or other crap are much more a problem today, not airliners."
I trend to agree with Udo. Funny how passengers will complain about a $5 fuel surcharge and on the way to the airport stop and spend $60 to fill up an SUV and buy a $2.79 24-oz. bottle of water at the terminal.
TomFoolery From Austria, joined Jan 2004, 512 posts, RR: 2 Reply 11, posted (9 years 2 months 1 week 6 days 13 hours ago) and read 1933 times:
Great point with the SUV. There is no reason that a family of 4 would need a small bus to tote kids back and fourth to the market. It is also not helping that people are moving further and further out from cities and longer and longer commutes to work every day. Granted, I had to spend a bit to get my 10 minute commute, but it's worth only having to fill my tank once every 3 weeks.
I tend to see the airline industry differently. Simply mass transit. The recession has really made airlines operate more efficiently. There are a lot fewer empty (or less than half full) flights leaving the airports now. Airlines have either scaled back frequencies, changed to more appropriate equipment or beefed up sales to fill a/c. During a recession is when the transportation industry is at its weakest, and these fuel prices are really taking a toll. I've no doubt that more sheep will be separated from the herd (NOTE: I'm not talking about US Airways).
TW741 From Liechtenstein, joined Sep 2004, 478 posts, RR: 0 Reply 12, posted (9 years 2 months 1 week 6 days 13 hours ago) and read 1919 times:
some Americans should go to their garage and think about the appropriate size of their cars. Fuel guzzling SUVs and other trucks or other crap are much more a problem today, not airliners - made me laugh - and you earned my respect for that ...
I'm wondering when European LCC's will start to apply higher ticket prices. Recently there was an interview with Niki Lauda (FlyNiki) and he was also asked regarding the fuel surcharge. He answered this question "there will still be 29 EUR tickets available - but the others will be a little more expensive meaning that we will just have less tickets at the 39 and 49 Euro range.."
Which means a wrong picture - the "bad legacies" apply surcharges and the "good LCC" does not - but actually they do...
Aa777flyer From , joined Dec 1969, posts, RR: Reply 13, posted (9 years 2 months 1 week 6 days 13 hours ago) and read 1912 times:
Well the main issue is that the industry CANNOT sustain $50 a barrell oil prices given todays revenue environment. If WN were paying market rate for fuel as are some of the legacy carriers WN too would be loosing money. You can bet WN will not beable to continue to hedge at $25 into 2006. Their hedge runs out at YE2005. The American public needs to realize they cannot fly anywhere they want for $99.
Udo From , joined Dec 1969, posts, RR: Reply 15, posted (9 years 2 months 1 week 6 days 13 hours ago) and read 1904 times:
One problem people have to realize is that airliners and their modern engines are not the fuel guzzlers - aircraft are already very efficient and the development goes on fast. The next generation of engines for the A380 and the B7E7 will again show a massive decrease in consumption.
It's the damn f.... cars (and not to forget masses of ships) where fuel consumption has not really decreased very much over the past years and decades. Car engines could be 50% (or even higher) more fuel efficient today - the technology exists - but the industry doesn't react. Why should they? Obviously the consumers just don't care - gas for cars still seems to be relatively cheap. Well, not in Europe with our high gas prices, but gas in the U.S. still is dirt cheap in comparison. And don't forget China...it won't be funny for the oil price development and the worldwide environment when some several hundreds of millions of people want to start to drive in the near future...
In the end, it's the airline business to suffer, though being very efficient already...
Udo From , joined Dec 1969, posts, RR: Reply 16, posted (9 years 2 months 1 week 6 days 12 hours ago) and read 1895 times:
Sorry, I don't agree Bmacleod.
1. Nigeria is not safe at all. I fear it's just about the start of wider conflicts in the country. Even a massive civil war is possible. It's really sad that the seventh largest oil producing country in the world is still driven by chaos - well, no wonder, most of the oil revenue went into pockets of rich companies abroad. And the normal Nigerians have never enjoyed benefits from the oil. That's an aspect of globalisation WE ALL have to think about. Countries are getting exploited so that we can fly and drive cheaply and then we wonder about the oil price exploding as soon as these countries get instabile. And Nigeria is just one example.
2. Have we forgot that the oil price has already almost hit the 50$ per barrel before the hurricanes started? That's nothing but an excuse.
And even if it were an excuse: expect more hurricanes in the future than we are used to...the phenomenon is called 'global warming'...
3. China is only just about starting. As I said, the industry is booming, millions of people want to drive. Their demand for oil will increase massively in the next years and decades.
4. Just let something big happen in Saudi-Arabia, and we get a new oil crisis. Al Quaida has for a long time targeted the country - if they blow up one raffinery, then 50$/barrel will be regarded as cheap...
So, I fear the problem won't be gone soon...let's face reality.
Udo From , joined Dec 1969, posts, RR: Reply 18, posted (9 years 2 months 1 week 6 days 12 hours ago) and read 1879 times:
I only meant that a price of 50$/barrel will be seen as cheap IF anything happens in Saudi-Arabia. And I regard Saudi-Arabia and their raffineries as extremely vulnerable to terrorists...so we shouldn't be surprised about such a worse case scenario. The whole damn world economy depends on stability in that country...I can only hope the right people know that, too.
Sfo777 From United States of America, joined Sep 2004, 19 posts, RR: 0 Reply 23, posted (9 years 2 months 1 week 6 days 11 hours ago) and read 1841 times:
The U.S. government is going to have to initiate an across the board 'fuel - fee' if they want anyone but Southwest not in bankruptcy by the end of this winter - while some debate that the increase is due to concerns about capacity in the U.S., others suggest that the issue is that we have reached the point where demand is starting to outpace supply. Luckily Southwest flies into the SF Bay Area though so we should be fine!