scotron11
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What Price Oil?

Tue Sep 28, 2004 10:34 pm

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
Posts: 1911
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RE: What Price Oil?

Wed Sep 29, 2004 12:12 am

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.
Keep on truckin'...
 
jacobin777
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RE: What Price Oil?

Wed Sep 29, 2004 12:20 am

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.........
"Up the Irons!"
 
Ken777
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RE: What Price Oil?

Wed Sep 29, 2004 12:41 am

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
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RE: What Price Oil?

Wed Sep 29, 2004 12:51 am

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.
 
7e72004
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RE: What Price Oil?

Wed Sep 29, 2004 1:09 am

How much fuel is the 7E7 supposed to save over current aircraft such as the 767/757, etc? I guess the question is will the 7E7 relieve a little of the pressure of high fuel prices?
The next generation of aircraft is just around the corner!
 
Boeing7E7
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RE: What Price Oil?

Wed Sep 29, 2004 1:16 am

1300 GPH vs 1750 in a 767. For 2,000 some odd aircraft:

9 Million gallons a day, or:

78.125 Million Barrels a year.

[Edited 2004-09-28 18:23:43]
 
TomFoolery
Posts: 423
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RE: What Price Oil?

Wed Sep 29, 2004 1:40 am

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.

rant over

TF
Paper makes an airplane fly
 
Boeing7E7
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RE: What Price Oil?

Wed Sep 29, 2004 1:46 am

They just raised the prices and it's now hidden.
 
Udo
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RE: What Price Oil?

Wed Sep 29, 2004 2:00 am

7E72004 wrote:

"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.


Regards
Udo
Me & You & a Plane Named Blue...
 
moman
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RE: What Price Oil?

Wed Sep 29, 2004 2:04 am

"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.

Moman
AA Platinum Member - American Airlines Forever
 
TomFoolery
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RE: What Price Oil?

Wed Sep 29, 2004 2:17 am

Udo,
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).

TF
Paper makes an airplane fly
 
TW741
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RE: What Price Oil?

Wed Sep 29, 2004 2:26 am

Udo:
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
 Big thumbs up - made me laugh - and you earned my respect for that ...

@TF - most European & Far East carriers (excluding the LCC's) have fuel surcharges on tickets - a detailed list (.pdf file - written in German but understandable for non-German speaking readers) can be found here: http://travelfax.at/downloads/treibstoffzuschlagstabelle.pdf

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...

=TW741=

TWA - we showed you how good we have been!
 
aa777flyer
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RE: What Price Oil?

Wed Sep 29, 2004 2:29 am

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.
The TSA was created to make the post office look efficient!
 
bmacleod
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RE: What Price Oil?

Wed Sep 29, 2004 2:41 am

Oil is at $50 for a few reasons:

1. Trouble in Nigeria
2. Production delays caused by Hurricane Ivan
3. Greedy China wanting more oil than it needs.

These factors will be overcome in a few weeks so oil will soon head down to $30-40 barrel.
"What good are wings without the courage to fly?" - Atticus
 
Udo
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RE: What Price Oil?

Wed Sep 29, 2004 2:42 am

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...


Regards
Udo
Me & You & a Plane Named Blue...
 
Udo
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RE: What Price Oil?

Wed Sep 29, 2004 2:55 am

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.


Regards
Udo
Me & You & a Plane Named Blue...
 
bmacleod
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RE: What Price Oil?

Wed Sep 29, 2004 3:01 am

then 50$/barrel will be regarded as cheap...

Well, if that's the case, the global airline industry would grind to a halt
and I can't see that happening.....
"What good are wings without the courage to fly?" - Atticus
 
Udo
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RE: What Price Oil?

Wed Sep 29, 2004 3:13 am

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.


Regards
Udo
Me & You & a Plane Named Blue...
 
7e72004
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RE: What Price Oil?

Wed Sep 29, 2004 3:17 am

Udo...you better reread what i wrote...i mentioned NOTHING about price of fuel...please reread my earlier post and think before you write.
The next generation of aircraft is just around the corner!
 
McGoose
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RE: What Price Oil?

Wed Sep 29, 2004 3:26 am

3. Greedy China wanting more oil than it needs.

If they'd using as much oil per capita as we do here in Europe, or worse as in the US, the oil price would probably double. So don't put the blame on China, the problem is really Europe and the US.
 
Udo
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RE: What Price Oil?

Wed Sep 29, 2004 3:38 am

Just want to clear something:

Of course I meant "Boeing7E7" and his comment in my first post on that topic. Too many 7E7-nicknames around here, easy to mix up!


Regards
Udo
Me & You & a Plane Named Blue...
 
flyingbronco05
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RE: What Price Oil?

Wed Sep 29, 2004 3:47 am

I like what Leno said last night.

If I pay $50 to fill up my whole tank, I demand the whole barrel!

I agree. Why should I pay $50 for fuel (what a barrel is) and only receive a partial amount of the barrel?
Never Trust Your Fuel Gauge
 
sfo777
Posts: 18
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RE: What Price Oil?

Wed Sep 29, 2004 3:56 am

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!

http://www.oilcrisis.com/
 
Udo
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RE: What Price Oil?

Wed Sep 29, 2004 9:21 pm

Thanks for posting the link, seems to be an interesting website!


Regards
Udo
Me & You & a Plane Named Blue...
 
FriendlySkies
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RE: What Price Oil?

Wed Sep 29, 2004 10:02 pm

We knew this day would come...time to start developing the first corn-powered airliners! Big grin
 
Boeing7E7
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RE: What Price Oil?

Wed Sep 29, 2004 10:52 pm

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.

You're assuming they can actually fill up the plane. Airbus has guessed wrong.
BTW... Where you going for Oil next now that Iraq fell through?

[Edited 2004-09-29 15:55:52]
 
IL76TD
Posts: 280
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RE: What Price Oil?

Wed Sep 29, 2004 11:05 pm

Flyingbronco05

You actually get 37% of the barrel for $50. The other 63% is

Refining costs: 13%
Distribution, Marketing, Retail Expenses: 14%
State and Federal Taxes: 36%

So basically, you lose over a third of the barrell to the gov't
 
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sebolino
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RE: What Price Oil?

Wed Sep 29, 2004 11:16 pm

I agree. Why should I pay $50 for fuel (what a barrel is) and only receive a partial amount of the barrel?

Because if you put crude oil in your tank, you won't go very far.
 
User avatar
sebolino
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RE: What Price Oil?

Wed Sep 29, 2004 11:21 pm


1. Trouble in Nigeria
2. Production delays caused by Hurricane Ivan
3. Greedy China wanting more oil than it needs.


I'm a little surprised by these reasons.

It's like the fucked up war in Iraq has nothing to fo with it.
And why are you talking about greedy China and not greedy USA which uses most of the earth oil to drive SUVs and other low efficient vehicles ?
 
hawaii12
Posts: 83
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RE: What Price Oil?

Wed Sep 29, 2004 11:22 pm

The real reason for the increase in uncracked crude recently is layered. Firstly, the oil comany's and refiners actual physical holding of crude has decreased: one to become more efficient, to free up capital in this time of cash shortages, and the mergers in the late 90's reduced the number of company's that can maintain a supply. In turn, the lack of supply leaves refiners vulnerable to supply disruptions and multiplies the likelihood of price spikes. Once this was seen by market speculators, they barged in hoping for a quick and failrly lock in buck.
As a result, the war in Iraq, Venezuela's strike, and the ethnic unrest in Nigeria caused huge spikes in crude at which point more speculators hopped on. Combine this with all the technical barriers that have been broken and then sustained (from a tech analysis pov), you have todays price of oil...
 
Udo
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RE: What Price Oil?

Wed Sep 29, 2004 11:48 pm

Boeing7E7,

It’s not only me assuming the A380 can be filled but it’s obviously also the managers of 13 (successful) airlines which have ordered the plane. I won’t start explaining for the 1045th time that there are many routes and slot limited airports which need the aircraft’s size. Just do your homework and check that out by yourself. As an analyst or pilot you should now better. Well, depends. If you fly ExpressJet jungle jets or similar stuff then you probably don’t visit slot limited airports very often…

The A380 is expected to offer operating cost savings of about 20% over the B747-400 and that’s an impressive figure. Airlines such as Qantas, Emirates or Singapore Airlines cannot grow anymore for the time being at London-Heathrow, just to name an example. Slots are simply not available. SIA flies three daily B744s, Qantas brings in B744s only, Emirates flies mostly B773 to London. The A380 gives them room for expansion without the need for new slots. Plus cost savings over the mostly used B744.
Even if SIA and other airlines buy 100 B7E7 each, it won’t help them on airports like LHR, NRT or others.

Btw, how do you know ‘Airbus has guessed wrong’? Last time I checked we still had September 2004, not September 2006. Can you tell me the magic trick?

Oh, I just want to remind you of something. I have read other posts from you as well and I can only wonder. You seem to be convinced that the whole world still has to learn the ‘save oil approach’, and that Boeing and the B7E7 will save the world with their advance in fuel saving technology. Fine! But that’s not the problem.
I would say first of all, many of your fellow countrymen should start re-thinking their attitude towards cars. Haven’t you heard that it’s not only the strong demand in China, but also the strong demand for gas in the U.S. which has brought the oil price up to new records? There are just too many SUV and trucks, pick-ups or whatever running in the U.S., and they run just because gas is dirt cheap compared to Europe. These cars waste gas like shit and most of the drivers do not really need the size of the cars. While staying for some weeks in California in September I often went along the highways around Los Angeles. The car pool lanes were always empty, while the other lanes were packed with single drivers, in masses of big, fat large gas guzzling cars. Ever thought about that? And people whine about a gallon price of 2 bucks. Come over here and enjoy a price three times higher or more! That’s how you learn to deal with oil consume!
Modern planes are already very fuel efficient today, new generations of engines on the A380 or B7E7 will be even more advanced. Car engines haven’t changed much in the last years…so that’s the real problem!

Well said about Iraq… the glorious occupation has helped a lot in bringing the oil price up to new records…don’t forget that when you vote in November. Oh, where new oil is coming from? Probably from Alaska, Bush has for a long time eyed new oil sources up there…, probably being advised by the industry: 'dump nature, save the SUVs'!  Big grin


Regards
Udo
Me & You & a Plane Named Blue...
 
yvrtoyyz
Posts: 626
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RE: What Price Oil?

Wed Sep 29, 2004 11:55 pm

Why I don't understand is why some airlines didn't lock into contracts on a flat fuel rate when prices were $36-$36 US/barrel. Almost 30% of Quebecers here in Canada locked into their home heating oil (albeit not a parallel example) when prices were continuing to climb and have avoided the extra costs of increasing oil prices.

This rise in oil surely is no surprise to the general public and to the aviation community, so it continues to dumbfound me why some airlines are crying poor, etc. when they could have locked in and contracted at cheaper fuel rates.

Also, all airlines in Canada now have a fuel surcharge which is included in the airfare prices. It has been this way since May, 2004.

-YVRtoYYZ
 
ltbewr
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RE: What Price Oil?

Thu Sep 30, 2004 12:05 am

The problem of a government mandated 'fuel price surcharge' is that the airlines would probably adjust downward their fares to the difference. There may have to be some long-term adjustments as to the highly discounted fares (like $99 e/w on a round trip + fees coast to coast). The USA government may have to allow temporary exemptions to the anti-trust laws to allow for some sanity, to allow airlines to cooperate with each other to adjust the cheapest fares upward to reflect reality. I know that is 'un-American' to some, but maybe it's that or long lines at the unemployment office and the Bankruptcy courts when more airlines fail.
 
hawaii12
Posts: 83
Joined: Fri Dec 12, 2003 8:11 pm

RE: What Price Oil?

Thu Sep 30, 2004 12:12 am

YVRtoYYZ
By the time most airlines wanted to hedge the price of oil, it was too late. In order to lock in a price at 30-35 (when current prices are at 45-50), you have to pay a very high premium.. something the cash poor airlines can not do. By hedging, they are essentially buying an already in the money option and the more in the money one is, the more expensive it is. If their financial dept were able to predict that the price of oil was going to soar before it actually happend, they could have hedged for much less (as it is more speculative the further out one buys the contract).

On a similar note, Delta recently sold its entire hedging portfolio of some 800mio bucks just to raise some cash as hedging locks up a lot of cash.
 
Boeing7E7
Posts: 5512
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RE: What Price Oil?

Thu Sep 30, 2004 1:05 am

Btw, how do you know ‘Airbus has guessed wrong’? Last time I checked we still had September 2004, not September 2006. Can you tell me the magic trick?


Don't you find it interesting that the only carriers ordering the A380 are those who operate in a limited competitive environment? Not only is the competition limited, so is the demand. Airbus has guessed wrong.

There are just too many SUV and trucks, pick-ups or whatever running in the U.S., and they run just because gas is dirt cheap compared to Europe. These cars waste gas like shit and most of the drivers do not really need the size of the cars.

It's a big country over here. Going car-less is not an option. Seeing as our contribution to the global economy is 20 times greater than yours and we only burn twice the fuel per person, I'd say we earned it. Get your facts straight about your gas. It's mostly taxes, not the fuel itself. Blame your government for the prices, not us. We all pay the same price per barrel.

[Edited 2004-09-29 18:14:48]
 
Udo
Posts: 4288
Joined: Tue May 18, 1999 5:16 pm

RE: What Price Oil?

Thu Sep 30, 2004 1:52 am

Now it gets indeed interesting. Can you please articulate what exactly you mean with ‘limited competitive environment’? Do you mean the slot limited airports?
In the case of LHR the access of the number of airlines limited due to bilateral agreements (e.g. UK-U.S.) – BUT, even if that were dropped, then no single additional slot for the affected airlines would be available.
Singapore Airlines, Qantas, Emirates, Malaysia, Thai would still need the larger aircraft to grow out of LHR, no matter if some more airlines were allowed to operate there.
Other airports just cannot grow any more, not tomorrow and not in 2010 or 2015. So airlines need to place larger aircraft for their own growth in these markets. If you call that a limited competitive operation ground, fine. Some airlines might be happy to fly one or two B777 a day to Narita, other airlines are not. That’s why they have ordered the A380.

Or do you mean the airlines having ordered the A380 are not facing enough competition? I hope you didn’t mean that because that would be simply ridiculous. Singapore Airlines, Lufthansa, Qantas, Air France or Virgin are facing a lot of competition around the world, just the same as American carriers are. Though, the mentioned ones are among the most profitable, most successful, most respected airlines. Their A380 orders were placed for economic reasons only.
Qatar, Etihad and Malaysia might have ordered the A380 for image reasons to some extent, but even Emirates NEEDS the capacity of the large bird. Their planes are full all over, their growth is simply a phenomenon which we haven’t seen yet. New times, new markets. You cannot compare that to PanAm in the 60s. Or look at China…the country’s economy is booming and so is their airline scene. Expect many A380 orders from that reagion in the future. The US aviation scene is no longer the lead indicator for the worldwide aviation development – it has moved towards Asia and will still move.

Well, demand might be limited today…but the A380 is still two years away. Let’s wait some four years and look at demand then. That bird is designed for the future, not for today.

You still insist ‘Airbus guessed wrong’…how exactly? Have they failed their order prediction for the A380? Not that I know…


Regards
Udo
Me & You & a Plane Named Blue...
 
McGoose
Posts: 35
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RE: What Price Oil?

Thu Sep 30, 2004 1:54 am

It's a big country over here. Going car-less is not an option. Seeing as our contribution to the global economy is 20 times greater than yours and we only burn twice the fuel per person, I'd say we earned it. Get your facts straight about your gas. It's mostly taxes, not the fuel itself. Blame your government for the prices, not us. We all pay the same price per barrel.

I hope this post was a big joke. I can't see why going car-less is not an option? It's going to be the only option in a not far distant future, trust me, the oil won't last forever. Like it or not.

 
yvrtoyyz
Posts: 626
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RE: What Price Oil?

Thu Sep 30, 2004 2:04 am

In order to lock in a price at 30-35 (when current prices are at 45-50), you have to pay a very high premium.

I am aware that if you want to lock in at a lower price than what the market is currently showing, then yes, there are penalties, premiums, etc. My question/point is that when prices were $35-$38/barrel in April/May, 2004, why didn't many airlines have the foresight to lock in at that rate, knowing that there was good reason to speculate that oil was going to reach $50/barrel, which is has.

-YVRtoYYZ

[Edited 2004-09-29 19:04:50]
 
SATL382G
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RE: What Price Oil?

Thu Sep 30, 2004 2:23 am

There are just too many SUV and trucks, pick-ups or whatever running in the U.S., and they run just because gas is dirt cheap compared to Europe. These cars waste gas like shit and most of the drivers do not really need the size of the cars -- Udo

I generally agree with Udo re: SUVs and there gas wasting ways. I'm stunned however that he doesn't mention the European predilection for performance cars running at 120MPH on the Autobahn (or sitting for 6 hours in a "stau", i.e. traffic jam). Every Mercedes, Beamer, Porsche, or Fiat that I drove in a decade of european living got comparable or worse gas mileage than my GMC pickup.

European or American it does not matter, if they got the money they buy a gas guzzler and pay the gas bill. If you want economy you buy a VW or a Neon.
"There’s nothing quite as exhilarating as being shot at and missed" --Winston Churchill
 
Udo
Posts: 4288
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RE: What Price Oil?

Thu Sep 30, 2004 2:23 am

Oh, I know it’s a big country over there. And I have never claimed that CAR-LESS is an option! I also live in an area in Bavaria where we all need cars, public transportation is not a realistic option. What I am talking about is the size of the cars, their gas consumption which has to be brought down. Is it necessary to drive a SUV with 400 HP just to pick up a meal at McDonald’s, some half a mile away? I told you what I experienced on Los Angeles highways. It’s insane, so many gas wasting cars, all-empty pick-ups, you cannot call that “well earned”.
I know it is our government to blame for the taxes, no doubt about that. And taxes are too high that’s for sure. However, people over here start thinking about transportation, they start think about economics of a car. It’s all about the engines, the technology exists, but the car industry has no need to offer fuel efficient engines – and especially NOT in the U.S. Only the gas price can force customers to demand better engines – and as long as Americans can get a gallon for 2 bucks nobody will change anything. Gas gets wasted as usual, demand remains high, oil prices keep up.

Btw, what kind of contribution to the world economy is 20 times higher than ours? Could you please provide some more details, only once?


Regards
Udo
Me & You & a Plane Named Blue...
 
Boeing7E7
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RE: What Price Oil?

Thu Sep 30, 2004 2:36 am

The US accounts for 22% of the Global Economy. Germany 4%. Factor in the production per person and you arrive at 20:1.

Ref the 380: It will serve airlines that are nationally owned or airlines that have relatively small fleets with a single flight per day from a main airport to another nation. Everyone else will choose a smaller aircraft and offer 2 or more frequencies. Airbus has guessed wrong and sales will stall. They'll be lucky to break even, but that doesn't really matter to them the way their government loans are structured.
 
Udo
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RE: What Price Oil?

Thu Sep 30, 2004 3:03 am

SATL382G,

First of all, most European countries have a speed limit. Germany is one of the very few countries where you can go 120 MPH or faster. And there aren’t many ‘Autobahnen’ left where you can go fast all the way. Many sections already have a speed limit.
And if you check the development in car demand in Germany you will find out that the percentage of Diesel cars goes up massively. That’s because they consume less gas and still perform well, while not being any longer ‘dirty’ as in former times.
And traffic jams are certainly not worse over here than in the U.S. Another fact is that SUVs or pickups are VERY rare here, while they are common in the U.S. And how many VW Polo, Lupo or similar sized cars are there in the U.S. compared to SUVs?



Boeing7E7,

Can you please give a source for the info on the global economy?


Back to the A380:
- Lufthansa, Qantas, Singapore Airlines or Virgin have never seen a single penny from the government. And since when is FedEx state-owned? The same goes for British Airways and Cathay Pacific which I consider as hot A380 candidates in the future.
- Fleet sizes (just mainline, without freighters): Lufthansa 224, Air France 239, Qantas 123, FedEx 360 (exception, as a cargo carrier), Singapore Als 90, Malaysia 97, Korean 98 – quite big fleets I would say
- Have you never checked timetables? FRA with LH or CDG with AF are larger hubs than most US gateways. One single flight from a main airport to another nation? Hm, it seems you have no idea about traffic in the EU
- What counts is INTERNATIONAL long haul traffic to judge the A380. You cannot compare Austin-Cleveland runs with Frankfurt-Chicago or Singapore-London. Singapore Als operates three daily B744s to London and cannot get more frequencies. So everyone would choose smaller aircraft and offer more frequencies? WHO? HOW? Powered by David Copperfield? What about Narita? Why do you think Lufthansa, Air France, British Airways do not offer four daily A340/B777 flights?

What has Airbus guessed wrong? The 131 firm orders until now? The number of airlines to order? Oh sorry, forgot last time to mention Air China and China Southern which means 14 customers and a total of 141 orders. That looks really good to me…and as I said, some other airlines will follow. British Airways, Cathay Pacific, South African.



Regards
Udo
Me & You & a Plane Named Blue...
 
iowaman
Posts: 3874
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RE: What Price Oil?

Thu Sep 30, 2004 3:06 am

We knew this day would come...time to start developing the first corn-powered airliners!

If that happens then maybe us farmers can actually make money! Big thumbs up
 
Flying-Tiger
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RE: What Price Oil?

Thu Sep 30, 2004 3:16 am

@ Iowaman: that fuel is already existing, and in Europe refineries are just starting to add bio-ethanol (97%) to regular gas (share about 95% gas, 5% bio-ethanol) in an effort to promote bio fuels and to bring forward the competitiveness of these types of fuel. I expect the first trials with planes to be not too far out, about 10 years max I´d say.

Regards
Flying-Tiger
Flown: A319/320/321,A332/3,A380,AT4,AT7,B732/3/4/5/7/8,B742/4,B762/763,B772,CR2,CR7,ER4,E70,E75,F50/70,M11,L15,S20
 
SATL382G
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RE: What Price Oil?

Thu Sep 30, 2004 4:04 am



First of all, most European countries have a speed limit. Germany is one of the very few countries where you can go 120 MPH or faster. And there aren’t many ‘Autobahnen’ left where you can go fast all the way. Many sections already have a speed limit.

I'm not talking about speed limits. The average european drives faster (and therefore less economically) than the average american. I base that on having driven extensively on both continents.

And if you check the development in car demand in Germany you will find out that the percentage of Diesel cars goes up massively. That’s because they consume less gas and still perform well, while not being any longer ‘dirty’ as in former times.

Visibly "dirty"? You need to be careful using the word "dirty". Car manufacturers have spent a ton of money making emissions appear "clean" while leaving behind other invisible pollutants.

And traffic jams are certainly not worse over here than in the U.S. Another fact is that SUVs or pickups are VERY rare here, while they are common in the U.S. And how many VW Polo, Lupo or similar sized cars are there in the U.S. compared to SUVs?

That's funny! Traffic jams in Germany are much worse and more common than in the US. Heck the autobahn routinely comes to a complete stop and folks get out and start socializing and this is out in rural areas!! I had this happen to me in D.C. once. To their credit though Europeans will cut off their engines when stopped in a stau. You're confusing your experience in California with the entire U.S.

So what if pickups and SUVs are rare in Europe? European performance cars are rare in the US. I just looked out my front window and I see a dozen economy cars and 2 medium sized pickups. Everyone I know who owns a SUV or pickup also drives an economy car. So anecdotally I'd say economy cars fare rather well. True, US manufacturers sell a lot of SUVs/Pickups compared to their economy cars, however foreign manufacturers of economy cars (Hyundai, Kia, Honda, Mitsubishi, etc) sell very well here in the US.

I think if you'd stick to your basic facts, i.e. some people buy more car than they need (Beamer or SUV, european or american), you'd present a better argument than with all this US bashing.

"There’s nothing quite as exhilarating as being shot at and missed" --Winston Churchill
 
SATL382G
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RE: What Price Oil?

Thu Sep 30, 2004 4:10 am

that fuel is already existing, and in Europe refineries are just starting to add bio-ethanol (97%) to regular gas (share about 95% gas, 5% bio-ethanol) in an effort to promote bio fuels and to bring forward the competitiveness of these types of fuel.

5% ethanol is old news. Refineries in iowamans part of the US have been making gas at 10% ethanol for some time now. In Minnesota 10% ethanol is sold everywhere by law and the governor is proposing going to 20%.

"There’s nothing quite as exhilarating as being shot at and missed" --Winston Churchill
 
jacobin777
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RE: What Price Oil?

Thu Sep 30, 2004 4:36 am

regardless....we still consume > 20% of the worlds oil, with only 5%-8% of the worlds population.........China on the other hand is 3-4 times larger than our population, and they consume much less than we do........I fail to see how anyone can blame ANYONE but us???

we've been spoiled by cheap gas, that's about it.......maybe we are in a new reality......

Petrol in Europe, particularly in London, is very expensive....(i'm only making a comparison of petrol, nothing more)...its equivalent, if i'm not mistaken, is $4.00/gallon...(i'm sure some Brits could help me on that)

that being said, when WN's hedge is finished, then I think there will be a fuel surcharge by the LCC's.

personally, I think we will have a synchronised global recession, particularly where the U.S., Chinese and Japanese economy go back into recession....THAT will drop the price of oil...........
"Up the Irons!"
 
Udo
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RE: What Price Oil?

Thu Sep 30, 2004 5:11 am

SATL382G,

What is the average European? Quite a funny expression.
You might have had some time over here but I can tell you since our government introduced the so-called “eco tax” on gas people have turned in general more sensitive about driving. Saving gas is a big deal here, car manufacturer advertise a lot their most efficient models, car clubs offer driving seminars, you can read about “saving gas” everywhere. Sure, there are still many people going fast, but a lot has changed. And I drive 25,000 miles a year, both autobahn and normal roads and I can tell.

No, I don’t mean visibly dirty. Diesel cars have become almost as clean in emissions as gasoline cars. Yearly tax on cars over here is partly based on emissions and older diesel cars have become quite expensive. That has increased the demand for more modern diesel engines and the industry provides not only very efficient cars but also very clean ones.

Oh, I don’t know where you had your experience about traffic jams in Germany but you can believe me it’s not as bad as you describe. It’s bad around the large cities and during holiday periods but to claim traffic jams are worse than in the U.S. is just ridiculous. Btw, if it comes to stop in rural areas, then it’s because of an accident. And German highways do have a maximum of three lanes on each side (most have two) while American highways have more lanes usually. So sometimes they have to close the two lanes in a case of accident.
The Autobahn? I didn’t know there is just only one…  Big grin
Well, is it possible that you are confusing your experience with all of Germany or Europe?

Many European performance cars can still be regarded as fuel efficient compared to heavy, large V8 pickups or SUVs. And I just read that already 60% of all Audis are ordered as Diesels. And even the A8 Diesel is a gas savings wonder, while still offering a good performance. You cannot compare Pickup and SUV fuel guzzlers with relatively efficient BWM 5 series or Mercedes E. Btw, SUVs and other heavy cars are getting a hard time in Germany now, tax has been reformed just recently.
And over here many families do only own ONE car, and in most cases these are economy cars. I find it funny to emphasize that SUV owners in the U.S. also have a economy car…wow, really impressive! So even one more fact to show that SUVs often don’t have a real purpose.

My point is that the percentage of SUVs or other heavy cars in the U.S. is much higher than in Germany where small cars (economy cars) dominate the scene. And people who go fast or own large cars here have to pay their price for doing that which makes ecologic sense.
I mean it would be a good thing if U.S. drivers had to pay a bit more for gas. It would give them a reason to go for more fuel efficient cars. And it would reduce the huge demand for oil in the U.S. which is one reason for the oil price record heights.

And criticising the American love for SUVs and large cars doesn’t mean I’m bashing the U.S…


Jacobin777,
thanks for your posting. That's exactly my point!


Regards
Udo
Me & You & a Plane Named Blue...
 
SATL382G
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RE: What Price Oil?

Thu Sep 30, 2004 5:13 am

The new reality is alternative fuels, particularly hydrogen and the so-called hydrogen economy.

When the logistics and economics of hydrogen become doable (i'd say with in 10-15 years) oil will begin to drop out of the energy picture, and become strictly an issue for the chemical/pharmaceutical industries.

The governments and industries depending on oil need to ride the alternative fuel wave or be swamped by it.

"There’s nothing quite as exhilarating as being shot at and missed" --Winston Churchill