Fernando MonteiroAirlines in High Altitude Trouble
May 26th 2008 10:09
Airlines around the world are up to paying a bill for fuel $70 billion larger than last year. A staggering amount by any means. Cost cutting in most airlines is already going on. Qantas increased prices of tickets by 4%, American Airlines charges now $15 for checking a bag, some less profitable routes are cut, and so on. A few American airlines filed for bankruptcy. According to the NZ Herald "airlines may lose as much as US$40 billion this year, more than three times the deficit recorded in 2001 after the September 11 terrorist attacks".
With petrol as high as $135 a barrel and unlikely to come down any time soon, what is the future for air travel? Interestingly enough, the cheap airlines such as JetStar and Pacific Blue seem to be doing ok, even though Pacific Blue has problems. According to experts cited by the source above, the fuel crisis will not bit budget airlines equally.
If you think of investing in an airline, what do you think the medium-term outlook for them is? I imagine that there is no way the price of petrol will come down soon because it is being pushed up by demand from emerging economies such as China and India and others and that is very powerful.
We are left with the development of alternative fuels. But that would take quite a while to become usable in new airplanes or adapted old ones.
Well, since the low cost airlines are doing well in such environment, at least you can think that the future belongs to them. Let's wait and see.
With petrol as high as $135 a barrel and unlikely to come down any time soon, what is the future for air travel? Interestingly enough, the cheap airlines such as JetStar and Pacific Blue seem to be doing ok, even though Pacific Blue has problems. According to experts cited by the source above, the fuel crisis will not bit budget airlines equally.
If you think of investing in an airline, what do you think the medium-term outlook for them is? I imagine that there is no way the price of petrol will come down soon because it is being pushed up by demand from emerging economies such as China and India and others and that is very powerful.
We are left with the development of alternative fuels. But that would take quite a while to become usable in new airplanes or adapted old ones.
Well, since the low cost airlines are doing well in such environment, at least you can think that the future belongs to them. Let's wait and see.
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