Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
Airlines face battle for survival
Kevin Done, Financial Times
The structure of the world airline industry is going to change “profoundly”, Jean-Cyril Spinetta, chairman and chief executive of Air France-KLM, warned on Thursday, as carriers struggle to come to terms with a doubling of the oil price in the past 12 months and weakening economic growth.
“There will be major restructuring. Things are changing violently and quickly,” he said.
The outlines of the winners and losers in the latest global aviation crisis are already becoming clear at frightening speed.
(22 May 2008)
9 Airlines Face Threat of a Credit Downgrade
Micheline Maynard, New York Times
In the latest sign that the outlook for the airline industry is darkening, Standard & Poor’s Ratings Services on Thursday placed nine big airlines on CreditWatch with negative implications, meaning that it was likely to cut their debt ratings.
A senior credit analyst with S.& P., Philip A. Baggaley, said the action was taken because of “potential severe financial damage” that could result from record fuel prices. In total, 10 airlines, including all the major carriers, are now under the CreditWatch negative designation.
The price of jet fuel has risen 82.5 percent in the last year and 10 percent in the last month, making it the single biggest expense for the airlines.
(23 May 2008)
Airlines and Alternative Fuel (video)
Scott Nance, Energy Policy TV
Washington, DC – Nancy Young, Vice President, Environmental Affairs, Air Transport Association (ATA); Scott Nance, Content Acquisition Manager, Energy Policy TV
Young is interviewed about airline industry adoption of alternative fuels, from both fuel economy and environmental perspectives, as the industry looks to further reduce its greenhouse gas emissions.
Related content found at:
Air Transport Association
(22 May 2008)
Silent Spring For Aviation
Byron W. King, Energy and Oil
My recent flight down to Texas offered some perspective on the future of aviation. And that future is bleak.
No, I will not regale you with a story of lost baggage or rude gate attendants. Actually, the flight was fine. I flew Pittsburgh to Charlotte, and then Charlotte to Houston. From my perspective, there were no travel problems. Really, even the Transportation Security Agency people in Pittsburgh showed some courtesy. That part of flying was fine.
But I’m sure glad that I am not paying for the gas for these jets out of my own petty cash. Wow! Fuel costs are killing the airlines. Almost every flight in the skies these days loses money. It does not matter how few peanuts they put in the little bags. At the very least, 20% of airline seats are going to go away within the next six months. Really, some airlines cannot ground their inefficient planes fast enough.
In the future, legacy carriers that fly packed aircraft between distant hub cities might eke out a small profit on each flight. That’s with much higher ticket prices. But the shorter hops are money losers. So the current situation cannot last. At this rate, small towns are surely going to lose air service.
It means that 70% of the nation’s airports are at risk of losing most or all of their airline service. And you have probably noticed that the U.S. passenger rail system is mostly gone, except for a few corridors.
About 45 years ago, Rachel Carson wrote a book called Silent Spring. The book sounded an alarm about the impact of man-made chemicals on the natural environment. Carson’s “silent spring” referred to the widespread destruction of bird life due to toxic poisoning and destruction of habitat.
It is time for turnabout. Mother Nature is taking her revenge in the form of high-priced oil. The cost of jet fuel is soaring. The airplanes of the world are starting to get grounded. The skies of the future will not be so crowded. Flying will cease to be an option for many tens of millions of Americans – maybe for hundreds of millions.
In the future, only the most efficient jets (like Boeing’s new 787 Dreamliner) will ever go wheels up at the end of a runway. Ticket prices will be high. How soon will these things happen? I think that we will experience our first silent spring as early as next year.
(22 May 2008)
Byron King is an EB contributor.
