American just pissed off "regular" flyers/potential future elites.

 

Looks like the elites wont be affected by this.

I am really getitng antsy about flying costs. gas for my car is not an issue since I stay really close when in town. For general sanity, I do depend on flyin' places on my time off. Sheesh, this year I have been to more out- of- state or country  cites than to suburb communities outside of Cleveland. I guess next year I should plan on visiting Parma, OH instead of Parma,Italy.

That sounds like a great vacation motto for Ohio. The list would be so long . . .

 

Don't visit Parma, Italy . . . visit Parma, Ohio

 

Don't visit Versailles in France . . . visit Versailles, Ohio

 

I could go on and on and on . . .

I actually had Athens in mind...but if I say it, I may jinx it and have to go to, gulp, Athens, Oh. I would have to trade ouzo at the Parthenon for forced beer bongs in a sticky basement bar.

I actually had Athens in mind...but if I say it, I may jinx it and have to go to, gulp, Athens, Oh. I would have to trade ouzo at the Parthenon for forced beer bongs in a sticky basement bar.

 

You know you can just chill with our favorite Athen's forumer.  he he he

http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article4029739.ece

 

May 30, 2008

Fuel prices spark holiday crunch as air surcharges soar

Valerie Elliott and Christine Buckley

 

Families are facing holiday misery this summer after big airlines sharply increased fuel surcharges on their flights, bringing the era of cheap air travel to an end.

 

Virgin Atlantic is imposing new charges today and, from Tuesday, British Airways long-haul passengers will have to pay £218 on top of the ticket price simply to cover the cost of fuel.

 

More at:

And Silverjet goes under!

www.flysilverjet.com

 

Who is next?  USAir and United have publicy stated they will not merge.

 

Which US Legacy Carrier goes under first? 

USAir

United

American

Airlines are history except maybe the long distance carriers.

Airlines are history except maybe the long distance carriers.

 

HUH??!! 

 

The legacy carriers are hurting and they need domestic routes to supplement international loads.

 

The LCC are killing the legacy carriers on domestic routes by keeping fares low.  So they are not making money and the Legacy's are in hubs that have major delays.  Can you say Newark?  Atlanta?  O'Hare?

 

I suspect, USAir (southwest has killed them at every city they've gone head to head- Baltimore, Philly, Boston, Nashville & Ft. Lauderdale all previous USAir strongholds.    SWs Vegas and Phoenix "hubs" are now hurting USAir operations) or United will be gone shortly.  Southwest opened up at Denver and hurt not only United but Frontier.  And they are killing United on intra Cali routes.

 

The legacy's are hurting, someone will die and a merger won't help.

 

I suspect, USAir

 

You know it’s bad when they take away the pretzels! I understand the need to cut costs but good lord, pretzels? Ya that’ll put them back in the black.

I agree with unusualfire. By about 2015, the only surviving flights will be transcontinental or transoceanic flights that only the wealthy or business travelers with expense accounts can afford. Why 2015? Because the airlines bought long-term oil futures contracts to hedge against fuel prices, and the hedge contracts bought at below $100 per barrel expire by the end of 2015. No airline, under their current business model, can survive at $100+ per barrel. Those that didn't hedge will be gone by then, notably their shorter-distance operations. Those that did hedge, like Southwest, may remain largely intact until then.

I agree with unusualfire. By about 2015, the only surviving flights will be transcontinental or transoceanic flights that only the wealthy or business travelers with expense accounts can afford. Why 2015? Because the airlines bought long-term oil futures contracts to hedge against fuel prices, and the hedge contracts bought at below $100 per barrel expire by the end of 2015. No airline, under their current business model, can survive at $100+ per barrel. Those that didn't hedge will be gone by then, notably their shorter-distance operations. Those that did hedge, like Southwest, may remain largely intact until then.

 

They end earlier than that.  I just asked one of our Travel researchers to check. Southwest current fuel hedge ends in 2009.

 

Then...

The advantage won't last forever because oil prices could plummet, and even if they stayed high the amount of fuel Southwest has been able to hedge in future years diminishes considerably from 55% next year to 30% in 2010.

Anyone know what the process of hedgeing mean? Does UPS do the same thing with diesel? Is it not the same as price fixing???

The advantage won't last forever because oil prices could plummet, and even if they stayed high the amount of fuel Southwest has been able to hedge in future years diminishes considerably from 55% next year to 30% in 2010.

 

That's partially my point, that Southwest is exposed after its hedging ends. But the other part of my point is that fuel prices have nowhere to go but up, and no airline can stay aloft when weighed down by $100+ per barrel oil.

 

Anyone know what the process of hedgeing mean? Does UPS do the same thing with diesel? Is it not the same as price fixing???

 

It's price fixing for the seller of fuel. For the buyer, it's locking in a price with the risk that the price could fall below the contract price, at which point the buyer has to make up the difference.

 

Let's say you think the price of fuel will rise in the future, and you're feeling particularly confident. So you buy a futures contract for the minimum alotment of 1,000 barrels of light-sweet West Texas Intermediate crude oil with a delivery date at the "longest" position allowed -- December 2016. That contract is selling for $127.90 per barrel, so the least you can buy is $127,900 worth.

 

At the end of November 2016, the futures contract comes due and you're ready to receive your delivery of oil. You pay a wholesaler at a mercantile exchange (Chicago, New York, London, Dubai...) the $127,900 and you take delivery of your 1,000 barrels of oil. Now, if the "spot price" (next month's price, in this case Dec. 2016's price) of oil has since fallen below the $127.90 price you paid in 2008, then you have to pay the difference. But if the price has risen above $127.90 the 2008 price you paid, then the wholesaler has to eat the loss.

 

This is one reason why speculators aren't driving the rise in oil prices -- they don't take delivery of oil. They sell it before that happens and if there's not enough demand for their high-priced oil futures, then the price of oil you see on the news falls.

Let's say worst case happens - USAir and United goes out of business - that is a whole lot of planes no longer flying. Obviously some of that gap will be filled by other carriers, but that is a lot less gas getting people's butts in the air. Then the new boeing jet that gets better mileage gets aloft using less oil, while some use the superjumbo to cram a whole town on one plane using less fuel.

 

There is a point at which declining demand/declining supply will allow the surviving airlines to stay aloft.

And reduced prices will put more planes in the air, increasing demand for fuel and raising prices again. If we're at or past peak oil, ANY consumption will continue to cause depletion. And that's from increasingly poorer quality oil, from oil formations that are increasingly more complicated and expensive to reach and those formations are increasingly in nations that are unfriendly to the U.S.

 

The cheapest, easiest to access oil is gone. That's the harsh reality. Oil is a one-shot deal and has no equal when it comes to it's amazing energy density -- 150 million years worth of sunlight condensed in hydrocarbon molecules that we're on track to burn up in a matter of 200 years +/-.

 

Now that's one hell of a ride!

United is so poorly run, they have bad management now Tilton is claiming he's mouthballing planes because of the current enviornment?!  NO SH!T SHERLOCK!

 

Has United's entire Public Affairs department gone MIA?  :wtf:  If my boss said some crap like that, I'd rip him a new one! :whip:

 

It become clear why Continental AND USAir decided not to merge with United.  United makes one bad decision after another.  I need to spend my united miles immediately.

---

United Air to reduce fleet, cut jobs

Carrier vows to cull aging 737s and 747s, and will reduce its payroll by 1,400 to 1,600 jobs.

 

By Aaron Smith, CNNMoney.com staff writer

Last Updated: June 4, 2008: 10:00 AM EDT

 

NEW YORK (CNNMoney.com) -- United Airlines said Wednesday it will reduce its fleet by 100 planes by 2009 and will cut 1,400 to 1,600 jobs to stave off losses related to fuel costs.

 

United, owned by UAL Corp., (UAUA, Fortune 500) said it was culling 94 B737s and six B747s from its fleet. The airline is getting rid of its entire fleet of B737s, which it identified as its "oldest and least fuel-efficient" planes.

 

http://money.cnn.com/2008/06/04/news/companies/united/index.htm?cnn=yes

Fliers in for pain as airlines pack it in

 

By Marilyn Adams, Barbara De Lollis and Barbara Hansen, USA TODAY

 

The USA's air-travel map is shrinking fast, dropping scores of routes and flights that airlines simply can't afford anymore in a world of $130-a-barrel oil.

 

A USA TODAY analysis of fall airline schedules shows the nation's most popular vacation destinations will be among the biggest air-service losers. Many flights to Honolulu, Orlando, Las Vegas and other favorite vacation venues have vanished or will soon because cheap tickets bought by tourists don't cover the cost of getting there.

 

Interactive link showing state-by-state losses:  http://www.usatoday.com/travel/news/2008-05-30-airline-cutbacks_N.htm

I'm happy that Cleveland was not a big loser, however, with Continental eliminating the Midway station and not moving the aircraft to the O'Hare flights hurts!

The weirdest response was from Hawaii, let's spend more on marketing because all those seats that no longer exist will be fixed by buying some ads (I guess if they are investing in Korean/Japanese/Chinese markets it makes more sense).

The weirdest response was from Hawaii, let's spend more on marketing because all those seats that no longer exist will be fixed by buying some ads (I guess if they are investing in Korean/Japanese/Chinese markets it makes more sense).

 

It's a way to force the airlines to add back capacity.  If enough people are willing to pay for seats they add.

 

Traditionally, people going to the South Pacific and Florida are leisure travelers and the majority are using miles not paying for those flights.

United Airlines plans huge cuts

Oil prices pushing carriers to focus on profitable destinations

Thursday,  June 5, 2008 3:10 AM

By Dave Carpenter

Associated Press

 

CHICAGO -- First it was soaring ticket prices and vanishing bargain fares, then new baggage fees. Now, air travelers are facing dwindling choices for when they can fly and where -- even to popular tourist destinations such as Las Vegas and Orlando.

 

The squeeze, a byproduct of record oil prices that are pushing airlines toward financial disaster, accelerated yesterday when United Airlines announced plans to take 70 more jets out of service and cut domestic capacity by 17 percent to 18 percent in 2008-09. Ted, its discount unit, will be shut down and 1,100 additional jobs eliminated, with more to follow.

 

http://www.dispatch.com/live/content/business/stories/2008/06/05/airline_cutbacks_0605.ART_ART_06-05-08_C8_L2ADJ13.html?sid=101

Now consider the last several stories and look at the routes that will be cut back or eliminated altogether: the same short-haul routes that we could be serving with passenger rail at even moderately high speeds (110 mph).

 

These air service cuts will also call into question some of the improvements being made at airports in the name of increasing capacity.

Hopefully we won't feel the brunt of this or else we'd be teetering on the verge of "focus city"... 

If you believe the predictions of Kunstler et al, what we're seeing with the airlines is but the tip of the iceberg.

 

The airlines are hurting in Europe too, but the travelers aren't (except having to deal with crowded trains).

Two thoughts...

 

Since CFTC announcement that it would investigate the rise in oil prices, oil prices have dropped 10% in a matter of around 10 biz days. So to say speculators aren't affecting the market may be a bit premature. Odd time for a market correction, IMHO.

 

Airlines can post a profits at $100+/barrel. I bet Emirates could operate at $250/barrel. RyanAir CEO said his company could break even at $135/barrel. Allegiant primarilly buys spot market fuel and posted a profit when fuel was between $85-110/barrel.

 

Ironically, alot of the first airlines to fall are those catered to business travel. Silverjet being the latest.

 

The worldwide airline industry is too dynamic right now to say there is a magic number for all carriers.

Since CFTC announcement that it would investigate the rise in oil prices, oil prices have dropped 10% in a matter of around 10 biz days. So to say speculators aren't affecting the market may be a bit premature. Odd time for a market correction, IMHO.

 

Not odd at all. The declines in oil's market price came when the USDOT announced that driving fell 4 percent -- the greatest reduction in driving since 1942 when it began to keep such records. Since U.S. motorists account for 30 percent of worldwide oil consumption (according to Bloomberg News), a significant drop in consumption is likely to cause prices to settle back. Wouldn't ya think?!

There are also some rule changes being looked at in commodities markets that would weaken the ability to gamble in those markets (making it more likely that a bad bet means you end up with the good itself), that seems to be taking some of the froth off the markets.

That US data was certainly positive. There plenty of other factors that have been used to increase price during this period too:

 

The formation Tropical Storm Arthur in the Bay of Campeche.

Data indicating Chinese short-term economic growth isn't going to stall but is likely to increase at current rates.

Continued violence and threats to production in Nigeria.

 

Somehow, three weeks ago, all three of these factors would have jacked oil prices higher. Now, it dosen't matter anymore because the US matters more than China. I'm not saying there is any collusion, but it's very convienient. We'll see what shakes out from the investigation.

 

 

Depends on what your sources of information are. The stuff you cited is noise. I've been doing lots of reading and watched the commodities markets long enough to discern what will cause price swings and what is noise. I usually post the influencing factors at the peak oil thread or the fuel prices-how we're feeling it thread. I started investing last year in commodity funds and stocks that should do well in an energy-constrained world (ie: don't buy oil stocks!!) and I couldn't be happier with my portfolio.

June 6, 2008

News Analysis

Big Airlines in a Rush to Go Small

By MICHELINE MAYNARD

New York Times

 

In the three decades since deregulation, the nation’s major airlines have operated with a simple strategy that bigger was better, and that the way to win the industry dogfight was to fly more planes on more routes to attract the most passengers.

 

Now, with fuel prices almost double the level of a year ago, many big airlines have decided that less is more, and they are shrinking in a hurry.

 

 

http://www.nytimes.com/2008/06/06/business/06travel.html?_r=1&th&emc=th&oref=slogin

Small airports struggle with dwindling air service

 

PRESCOTT, Arizona (AP) -- The rejection from Air Midwest came swiftly on a one-page fax. The carrier couldn't afford to fly to the mountain community of Prescott anymore, officials said. The city would simply have to find a new tenant for its tiny airport.

 

"Everything was going fine -- then, bam -- the airline is gone," Mayor Jack Wilson said with a sigh. "That's just not how you do business."

 

http://www.theglobeandmail.com/servlet/story/RTGAM.20080603.wriata03/BNStory/Business/

Almost $69,000 to fill up a plane... I held a contest here in the office and the highest guess for fueling a jet for the flight to London was $10,000. And that guesser "cheated" by asking me if the answer was five figures. That's just a devastating expense. There may still be airlines in a few years, but we aren't going to be able to afford to fly as much as we have.

well travelers have gotten spoiled with $99 fares.

 

The problem is airfares were too low to begin with.

$69,000 to fill up for a trip to Heathrow? Wow. What does that add up to on a per-seat basis for a Boeing 777? What does the airline have to charge to make a profit after this and all other expenses are taken into account?

I don't know what the seat per cost would be, but I do know on average 93% of seats on the plane (at all price points) need to be filled just to break even on each flight.

http://www.nytimes.com/2008/06/10/business/10skies.html?_r=1&partner=rssuserland&emc=rss&pagewanted=all&oref=slogin

 

Fewer Planes, but Not Fewer Delays

By MATTHEW L. WALD

Published: June 10, 2008

 

WASHINGTON — With airlines grounding planes because of fuel costs, there will be fewer planes in the sky. Logic suggests passengers could hope for fewer delays.

 

But the Federal Aviation Administration cautions that air traffic lanes will continue to be full in air space that is normally crowded.

 

 

That, plus $3, will buy you a cup of coffee in Washington.

 

By Anthony L. Velocci, Jr./Aviation Daily

 

[http://www.aviationweek.com/media/images/ca_images/Miscellaneous/cranWH

ARTON

 

Decrying the "sad state" of U.S. commercial aviation, former American

Chairman and CEO Robert Crandall yesterday declared three decades of

deregulation a failure and said that treating airlines like a regulated

utility must be a part of a broad solution to their current financial

crisis.

 

"We have failed to confront the reality that unfettered competition just

doesn't work very well in certain industries, as aptly demonstrated by

our airline experience and by the adverse outcomes associated with

various state efforts to deregulate electricity rates," Crandall told

aviation and financial industry professionals gathered at the Wings Club

in New York City. "It's time to acknowledge that airlines look and are

more like utilities than ordinary businesses."

 

 

Crandall is a crack pot!  Now crying wolf!  Bob go F yourself.

I was thinking this morning as they were talking about Continental on the radio (with respect to 16% cuts out of Cleveland but only 3% out of Newark) - do any of the money peeps for the airlines consider how much money they waste on hotel/travel/food/drink vouchers when flights get delayed or cancelled?  Someone must have thought about that, right?  That's just a s**t ton of money that gets expended for places like Newark because flights are ALWAYS delayed or cancelled.  If they put some of the burden on say, I don't know, Cleveland, that's one potential way to cut costs!

I was thinking this morning as they were talking about Continental on the radio (with respect to 16% cuts out of Cleveland but only 3% out of Newark) - do any of the money peeps for the airlines consider how much money they waste on hotel/travel/food/drink vouchers when flights get delayed or cancelled?  Someone must have thought about that, right?  That's just a s**t ton of money that gets expended for places like Newark because flights are ALWAYS delayed or cancelled.  If they put some of the burden on say, I don't know, Cleveland, that's one potential way to cut costs!

 

Expanding Cleveland was part of the way to reduce congestin at Newark.  Continental is afraid (analyst have used that) of expanding Cleveland at the risk of cannibalizing Newark.  Cleveland is a hub that can grow, many airports don't have that option.

 

I refuse to fly out of Newark, because I know I'm going to be delayed.  I hate flying out of O'Hare for the same reason but I'm bound to connect in O'Hare if the fare is cheaper than departing Cleveland.  UGGHHHHH

 

Also folks need to remember, the cuts were for newly created flight, so in essence, Cleveland is back to square one. 

 

My thought are to write the one continental board member from Cleveland and Larry Kellner.

I think that hell would freeze over before any airport in the NYC area would be "cannibalized" because of any other airport...  Maybe I will try to write the Continental board member...  I just know from personal experience as well as experiences of friends that everyone gets screwed over because of Newark, and Continental shells out thousands of those vouchers as a result.

I think that hell would freeze over before any airport in the NYC area would be "cannibalized" because of any other airport...  Maybe I will try to write the Continental board member...  I just know from personal experience as well as experiences of friends that everyone gets screwed over because of Newark, and Continental shells out thousands of those vouchers as a result.

 

You have to look at both sides of the coin from a revenue mgmt prospective.

 

Do we put planes in Cleveland, where we know there is a likely change there wont be a delay VS. the chance that there are NO high flying (First Class) leisure travelers or there aren't enough high paying O&D Business Customers to book tickets.

Yeah, that's another thing that I was curious about - how many travelers (business or leisure) that fly out of Newark originate in Newark?  I'm not saying kill Newark and make Cleveland its replacement, but by air, CLE only adds another 45-60 minutes onto a transatlantic flight, and I'm sure people who didn't start out in the NYC area in the first place would take a Cleveland flight over a Newark one.  I guess we'll just have to wait and see how the London and Paris flights performed at the end of their season later in the year.

$69,000 to fill up for a trip to Heathrow? Wow. What does that add up to on a per-seat basis for a Boeing 777? What does the airline have to charge to make a profit after this and all other expenses are taken into account?

 

Actually, if you have 8 full-fare seats purchased in first class, you could pay off that bill. So it's not as mindboggling as one would think. The trick is getting people to pay for premium services. American and European carriers are nickel-and-diming themselves straight into bankruptcy. They need to wake up, or the only carriers left will be in Asia and the Middle East

BA has improved greatly, so I wouldn't say all European Carriers.

BA has improved greatly, so I wouldn't say all European Carriers.

 

I agree that British, along with Virgin Atlantic, are representative of the best European carriers. But even with Sir Rick at the helm of VA they're not quite in the elite category with such airlines as Asiana, Qatar, Cathay Pacific or Singapore Airlines.

 

I'm not alone in this thinking, Skytrax/Zagat, etc. pretty much rate the Middle Eastern and Asian carriers as the overall best airlines for international service.

 

Anyway, going back to the topic at hand, it's not surprising that most of the best recieved airlines by travelers are not having the financial issues facing many of their American/European carriers that are not rated highly. Another concern is that with oil at $130/bbl it may be too late for them to upgrade services and catch up to compete.

 

So for many carriers it's either turn into an international version of Southwest without the hedging and streamling of aircraft, or languish somewhere in the middle and hope that fuel prices come down. Either way, it's bad news for carriers like Alitalia, United, Air France-KLM, etc.

BA has improved greatly, so I wouldn't say all European Carriers.

 

I agree that British, along with Virgin Atlantic, are representative of the best European carriers. But even with Sir Rick at the helm of VA they're not quite in the elite category with such airlines as Asiana, Qatar, Cathay Pacific or Singapore Airlines.

 

I'm not alone in this thinking, Skytrax/Zagat, etc. pretty much rate the Middle Eastern and Asian carriers as the overall best airlines for international service.

 

Anyway, going back to the topic at hand, it's not surprising that most of the best recieved airlines by travelers are not having the financial issues facing many of their American/European carriers that are not rated highly. Another concern is that with oil at $130/bbl it may be too late for them to upgrade services and catch up to compete.

 

So for many carriers it's either turn into an international version of Southwest without the hedging and streamling of aircraft, or languish somewhere in the middle and hope that fuel prices come down. Either way, it's bad news for carriers like Alitalia, United, Air France-KLM, etc.

 

Singapore is amazing!  It's ridiculous how fabulous they are!

 

BA has improved greatly, so I wouldn't say all European Carriers.

Anyway, going back to the topic at hand, it's not surprising that most of the best recieved airlines by travelers are not having the financial issues facing many of their American/European carriers that are not rated highly. Another concern is that with oil at $130/bbl it may be too late for them to upgrade services and catch up to compete.

 

So for many carriers it's either turn into an international version of Southwest without the hedging and streamling of aircraft, or languish somewhere in the middle and hope that fuel prices come down. Either way, it's bad news for carriers like Alitalia, United, Air France-KLM, etc.

 

I think United will die or either they AND Southwest will force USAir out of business as american carries cannot compete - especially with the Cathay Pacific or Singapore Air.

Which means that you should count on never flying in or out of Cincinnati again.

 

I don't see this as being very good for our regional airport...at all.  More detrimental for ours, I'd say.

 

Imagine the cost of first-class...

http://columbus.bizjournals.com/columbus/stories/2008/06/16/daily8.html

 

Tuesday, June 17, 2008 - 10:44 AM EDT

Nation's biggest airlines post combined $1.3B loss in 1st Quarter

Business First of Columbus

 

The seven largest passenger airlines in the U.S., a group that includes most of Port Columbus International Airport's major carriers, reported a combined quarterly operating loss of $1.3 billion in the first quarter, the second consecutive period the major carriers have slipped into the red.

 

A report from the Bureau of Transportation Statistics found that the loss for the group of seven airlines was the largest since the fourth quarter of 2005. The group includes US Airways Group Inc. (NYSE:LCC), Delta Air Lines Inc. (NYSE:DAL), American Airlines Inc. (NYSE:AMR), United Air Lines Inc. (NASDAQ:UAUA), Northwest Airlines Corp. (NYSE:NWA) and Continental Airlines Inc. (NYSE:CAL), which rank, in order, as Port Columbus' second- to seventh-largest carriers.

 

More at link above: