VV701 From United Kingdom, joined Aug 2005, 7401 posts, RR: 17 Posted (5 years 11 months 2 weeks 6 days 10 hours ago) and read 6317 times:
At trhe risk of being ridiculed by all of you I just found an article published in the independent Harvard Business School's students' newspaper, The Harbus, with this title.
The article relates to a presentation by Joe Schottland, MD of cosultants Seabury Group. Admittedly the article is not very recent but when it was published just over three months ago I believe the oil price was about where it is today.
SevenHeavy From United Kingdom, joined Mar 2004, 1156 posts, RR: 10
Reply 1, posted (5 years 11 months 2 weeks 6 days 10 hours ago) and read 6275 times:
Quoting VV701 (Thread starter): The article relates to a presentation by Joe Schottland, MD of cosultants Seabury Group. Admittedly the article is not very recent but when it was published just over three months ago I believe the oil price was about where it is today.
The way I read it, it was published in April '06?. For exmaple, it references Skybus as being about to start up and they have been and gone since then
PanAm747 From United States of America, joined Feb 2004, 4242 posts, RR: 8
Reply 5, posted (5 years 11 months 2 weeks 6 days 8 hours ago) and read 6050 times:
Proof that even "experts" - including those published by the College Publisher Network - believe in the concept of a perpetual motion machine.
Here's two examples of what I mean: In the late 1990's, there was the "dot com" boom. People were making lots of money on people investing in any company with "dot com" in their name. The state of California found its coffeurs filled to the brim based on income taxes from the mega-wealthy.
The belief that this was a sustainable situation was ludicrous to anyone with the least bit of common knowledge, but that didn't apply to our state lawmakers. Instead of realizing that the situation was going to come crashing down at any moment (which it did very quickly), they put it into their plans to not only spend this new money, but assume that it would be there forever! We're still digging out of that mess.
The other example is the housing boom. Shaky lending practices coupled with the American public buying larger and larger houses they could never afford created a bubble more delicate than the dot-com boom, but the U.S. didn't care - this would last forever.
Look at the foreclosure rate now. We all saw it coming, yet we closed our eyes to its consequences, hoping that if we ignored it, it would go away.
The same is happening with the author here. He addresses the airline industry, yes, but not the related industries that keep the airlines going!! He assumes that things like fuel, labor, wages of ticket buyers, maintenance, and other things will remain static and won't change dramatically over time. The disaster that has befallen in the industry because of rampant speculation driving the price of fuel through the roof alone has resulted in a situation almost unimagineable just a couple of years ago.
Predicting profits, unless you are shareholder in Exxon-Mobil, is shortsided to the point of comedy - and would be funny if there weren't so many lemmings willing to believe that "prosperity is just around the corner!!"
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2175301 From United States of America, joined May 2007, 1037 posts, RR: 0
Reply 6, posted (5 years 11 months 2 weeks 6 days 5 hours ago) and read 5862 times:
Of the businesses that are generally legal in the world; I believe that any review would show that the Software industry is the most profitable industry in the world. Typical profit margins are in the range of 20+%.
The Oil industry importers/refiners (Exxon, Mobile, etc) only operates at a couple of a percent (or less) profit margin.
Cloudy From , joined Dec 1969, posts, RR:
Reply 8, posted (5 years 11 months 2 weeks 4 days 2 hours ago) and read 5417 times:
The article puts forth only two pieces of real evidence. Both are questionable.
He mentioned that Southwest and Ryanair were very profitable in the good times. This is true only in comparison to other airlines. It is not true if the comparison is with business in general. Much larger profits are available in other industries. The airline industry is on the low end profitwise even in good times.
He also said the profitability of the industry follows a pattern that can be mathematically analysed, and that pattern predicts an upsurge of profitability. How this view can be maintained in the face of unpredictable factors such as oil prices is beyond me. The fact that at least domestic US airlines are not VERY profitable even in the best of circumstances also argues against such a model