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Fuel suppliers demand airlines pay cash in advance
Carl Mortished and Amanda Andrews, UK Times
Airlines are being forced to pay cash in advance for jet fuel as the major oil companies tighten the screws on an industry that is being crushed by an extraordinary surge in the price of crude oil.
Sources within the airline industry indicate that credit is being denied to most of the leading American carriers and the practice is moving to Europe and Asia. So uncertain is the cash solvency of the industry that jet fuel suppliers insist on prepayments into special bank accounts.
(26 May 2008)
Houston has lift-off as oil price rises
Alistair Osborne, UK Telegraph
… Just how cyclical oil is today, given the voracious demand from China and India, is a question that bugs every airline chief. But right now, says Stoneberger, for the citizens of Houston “it’s like boomtown again – though it’s not quite advertised as such, because we want to keep expectations lower than in the 1980s. Then, it was everyone out on the street waving flags. Today, I don’t think anyone wants to jinx it”.
… Jean-Cyril Spinetta, head of the world’s biggest airline, Air France-KLM, echoes Walsh and Arpey. “There will be major restructuring. Things are changing violently and quickly,” he says.
Already the casualties are lining up. On Friday, shares in all-business class airline Silverjet were suspended, an ominous sign after the failures of rivals Maxjet and Eos.
Including the latter pair, eight US airlines have filed for bankruptcy protection this year, including Frontier and Aloha Airlines. Most have ceased flying.
Says Andrew Fitchie, an analyst at Collins Stewart: “At $120, the entire industry is structurally unprofitable.”
The conundrum for airline chiefs like Walsh is assessing how much capacity will come out of the industry through airlines going bust and how that will affect fares and demand.
“If you look at prices, air travel has been incredibly cheap,” says Walsh. “You are not going to see it suddenly become a luxury-priced product, but fares will rise.” How even the big boys adjust to this environment is tricky to predict. Robert Boyle, BA’s commercial director, says: “What happens to industry pricing? And how quickly does that feed through to demand? These are complex issues.”
Not all analysts are convinced by Walsh’s thesis that, as weak carriers go bust, the industry’s big guns will be able to jack up seat prices.
(26 May 2008)
The end of the road for British motorists
Neil Lyndon, UK Telegraph
The dream is turning into a nightmare. The car, the one mechanical object that offers unlimited personal freedom plus the rapture of ownership, has become a millstone that is dragging us down to despair. There is a classical, Faustian symmetry to the story of Britain’s relationship with the car over the past 50 years – how the symbol of universal love and desire became one of near-unanimous loathing and misery.
With the price of crude oil topping $135 a barrel, a litre of diesel costing £1.26, and the price of filling the tank of an average car having risen by 70 per cent in two years, the motorists’ love affair with the car has never been under greater strain. A vehicle which cost £50 to fill in 2006 now costs £85. An AA survey published this week claimed that two-thirds of Britons are now contemplating cutbacks on car use and are spending less on other commodities, like food, in order to be able to run their vehicles.
(24 May 2008)
AAR: Railroads are four times more fuel efficient than trucks
Progressive Railroading
For every 27 gallons of diesel consumed by trucks to haul one ton of freight, railroads burn seven gallons to reach a similar distance, according to the Association of American Railroads (AAR).
As part of its “Freight Railroads Go the Distance” campaign, the association notes that U.S. railroads last year moved a ton of freight an average of 436 miles per each gallon of fuel, a 3.1 percent improvement vs. 2006 and “astonishing” 85.5 percent improvement vs. 1980, the AAR said.
“That’s the equivalent of moving a ton of freight all the way from Baltimore to Boston on just a single gallon of diesel fuel,” said AAR President and Chief Executive Officer Edward Hamberger in a prepared statement.
Since 1980, railroads have reduced fuel consumption by 48 billion gallons and carbon dioxide emissions by 538 million tons – making railroads about four times more fuel efficient than trucks, the AAR said.
Railroads continue to take steps to further reduce fuel consumption and air emissions, such as by working with suppliers to develop technologies that reduce locomotive idling, as well as hybrid and gen-set switchers for yards, and other hybrid and fuel-cell locomotives, the association said.
(22 May 2008)
