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Wall Street Journal: What to expect from rising jet fuel prices
Here's an arresting fact: The increase in jet fuel costs from a year ago that airlines are currently dealing with totals around $25 billion in additional costs for carriers, which is about five times more than the airline industry has ever earned in a single year (1999 was a record year for the industry, with profits topping out at about $5 billion).That comes via the Wall Street Journal, whose Middle Seat column yesterday puts some good perspective on just how much the airline industry is hurting (as Grant posted yesterday, American is to begin charging money for your first checked bag in June). Airlines are faced with staggering expenses even as they know that countering them would mean having to make more money than they ever have before.
What can they do? Scott Mccartney, the WSJ's Middle Seat columnists, says to expect airlines to begin severely cutting capacity, eliminating money-losing routes, which in turn will increase ticket prices. "The price of flying has to go up if airlines are to survive," he says. Also, expect some carriers to head to bankruptcy court beginning next year, which isn't such a bad thing, Mccartney says. With fuel prices hitting $130 a barrel and airlines faced with major shortfalls, bankruptcies would be healthy for the industry, as the weakest carriers bow out and the market consolidates.
Filed under: Airlines
Reader Comments (Page 1 of 1)
Captain Jim Stabile Jun 11th 2008 2:16PM
June 11, 2008
Dear Jeffery,
My name is Jim Stabile, I am a 23 year Captain for a major airline and I am the vice President of Aeronautical Data Systems Inc (ADS), a software/hardware development company located in Northwest New Jersey.
ADS has solved an important flight planning issue for the aviation industry which results in substantial fuel reduction, cost savings, and carbon emissions reduction, as well as an increase in air safety.
Quite simply, the airlines are operating inefficiently as their technology for calculating fuel consumption is outdated, and as a result they carry too much fuel (which requires them to burn more fuel to fly with the substantial additional weight). While the industry could handle the inefficiency previously due to low fuel prices, the exorbitant rise in fuel cost has caused the airline industry to operate in the red.
ADS produces software and hardware that reduces fuel required on international flights of up to and over 11 percent, by accurately calculating the amount of fuel actually required for each flight. This technology has been used by corporate aviation for over 15 years, but the commercial market has been slow to respond due to lack of financial incentive. The savings are dramatic – up to $1.5 million per aircraft per year on international flights – as well as significant reduction in fuel consumption and carbon emissions.
If you would like more information, please visit our website at www.adsopp.com or feel free to contact our office at 973 383-2224. Thank you.
Sincerely,
Jim Stabile
Vice President
Aeronautical Data Systems Inc.