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Rising costs reshaping air travel across the USA
Marilyn Adams and Dan Reed, USA TODAY
Record-high oil prices are threatening to ground millions of travelers who have grown accustomed to flying for fun and business during the past 30 years.
Air travel in the USA has grown at a rate five times faster than the population since 1978, when deregulation first allowed airlines to compete by setting their own prices and routes without government approval. Last year, 769 million passengers boarded U.S. airline flights.
But with today’s unprecedented jet fuel prices, airline executives and aviation analysts are warning that only extreme fare increases and dramatic cutbacks in flights will enable the industry to cover a 2008 jet fuel bill the airlines’ trade group projects will be 44% higher than last year’s.
… “You can’t underestimate the spike in fuel prices and how it is fundamentally changing the industry.” – Delta Air Lines CEO Richard Anderson
(1 May 2008)
Airlines face worst crisis since 2001
Walden Siew, Reuters
Major airlines that survived a decade of reorganization through bankruptcy are now facing their biggest test since the September 11, 2001 attacks.
… Rising fuel prices, falling consumer demand and the prospect of a U.S. recession threaten to cripple the industry that was just starting to get on its feet before fuel prices soared to record levels, ravaging profits.
U.S. jet fuel prices hit another record over $3.50 a gallon this week, tracking a rally in the cost of crude.
(1 May 2008)
Contributor Ed writes:
Looks like a lot of people are going to get forced away from air travel, and America’s overtaxed and embarrassingly small rail system won’t be able to take up any of the slack.
It’s a crime that the federal government let our rail system whither.
British Airways is big loser as public stay grounded
Steve Hawkes, UK Times
Nearly half the British public have vowed to fly less in the coming year to help the environment, according to a new survey that will alarm airlines struggling with record fuel prices and the fallout from the credit crunch.
An exclusive poll for The Times shows that 46 per cent of consumers have pledged to cut air travel while 23per cent will fly only with those airlines that have a clear green strategy.
More than three quarters – 81 per cent – feel that airlines still are not doing enough to tackle social and environmental issues.
(30 April 2008)
Flying into trouble
Leo Hickman, Guardian
The sky-high cost of fuel means that airlines are going out of business – sooner than environmentalists predicted. What does it mean?
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For all the talk about how home heating and petrol pump prices are fast rising, there seems to be remarkably little comment – given our love affair with flying – about how runaway oil prices are hurting the airline industry. Within the past few weeks, a number of airlines have gone out of business – this weekend saw Eos, the business class-only airline operating routes between Stansted and the US, join the growing list. Eos follows its direct competitor Maxjet, as well as Oasis (which claimed it was the first long-haul, low-cost carrier when it began flying Hong Kong-London in late 2006 for as little as £75 each way), and four US-based carriers: ATA Airlines, Aloha, Skybus and Champion Air.
Not all of these failures can be attributed to rising jet fuel prices alone – the economic slowdown, credit crunch, and weak dollar are taking their toll, too – but it’s the sky-high operating costs that have tipped most of them over the edge. It is now surely just a question of when, not if, one or more of the well-known carriers hits serious turbulence by going bust, or turning to consolidations and mergers for protection, as typified by the recent Northwest/Delta lovefest as well as persistent talk – despite a denial from its president this weekend – of Continental hooking up with United and/or US Airways.
(28 April 2008)
