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The successful airline thread

Discussions about the economic and financial ramifications of PEAK OIL

Re: The successful airline thread

Unread postby RSFB » Sun 09 Nov 2008, 15:41:32

Your experience sounds similar to my trip to China. I went with the now defunct Oasis Hong Kong airline. Cheap tickets, great service, more legroom than my flight back from Beijing with BA. They also had plans for expansion.

The low-cost model didn't work out for them, probably in great part due to the super-spike in oil prices. Small airlines can't survive for long in a tough environment (even big airlines which have power to get better fuel prices are having a hard time).
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Re: The successful airline thread

Unread postby dorlomin » Sun 09 Nov 2008, 16:06:22

I know in Dubai they are planning a new low cost airline. Quite a big one as well. As oil goes up, oil countries will have more money so the middle class may actualy get a bit of a trickle down.
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Re: The successful airline thread

Unread postby diemos » Sun 09 Nov 2008, 16:51:02

amazing what you can do if you have oil wealth to subsidize your enterprises.
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Re: The successful airline thread

Unread postby Tanada » Sat 17 Oct 2015, 11:46:50

Seems like the doomers are writing gloom no matter which industry they are reviewing despite low fuel prices. Much more at link below the quote.

Oil futures have been on a torrid plunge in recent weeks, touching lows below $80 per barrel. Great news for airlines, right? Maybe not.

For roughly the past 35 years, inexpensive jet fuel has routinely served as a siren call to airline executives. Cheap fuel spurs more flights and wild grabs for whatever business looks attainable in the travel market. Marginal routes become profitable with lower fuel prices, which, in turn, bolsters the argument that new flights can boost revenues with little cost. Cheap fuel also lets an airline experiment more radically with flight schedules in the bid to swipe market share from rivals.

“If it keeps trending lower, it totally changes the economics of the industry again,” says Seth Kaplan, managing partner of Airline Weekly, an industry journal. With oil cheaper, Kaplan predicts that many airlines will probably fly their planes in off-peak periods because of the low costs associated with those extra flights. A few additional flights on the weak travel days of Tuesday and Saturday could return to some schedules.

This possibility has some Wall Street analysts in a tizzy, concerned that if oil stays cheap enough for long enough, lower prices will cause airlines to backslide on their new-found religion against deploying too much capacity. “We feel like this industry needs an oil spike now more than ever,” Wolfe Research analyst Hunter Keay wrote last week in a client note. “[C]apacity discipline of late (from some) seems theoretical at best.”


http://www.bloomberg.com/bw/articles/20 ... r-airlines
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Re: The successful airline thread

Unread postby Tanada » Sat 17 Oct 2015, 15:17:28

pstarr wrote:Tanada, your article argues that low fuel prices will cause airlines "to backslide on their new-found religion against deploying too much capacity." Why should that be bad?

It seems that adding capacity (on the assumption that lower fuel cost reduce overhead) will allow the airlines to attract additional passengers and lower ticket prices for all passengers. How can that be a bad business decision?


Well here is the way I see it. Toledo express Airport is the closest airport to my home and it has six terminal gates for airlines to use. Over the last decade it has fallen in use so far that there is very rarely more than one or two flights per day. So say Northwest or United decides to add flights to Toledo because fuel is cheap. Will that actually make even a tiny difference in the life of people from this area? Detroit Windsor International airport is 60 minutes north taking I-75 and Cleveland International airport is 90 minutes east on I-80/90.

When Toledo airport started out they had direct flights to places people wanted to go like Orlando, Florida or New York City, but when the hub and spoke model came into existence it was switched from being a direct flight airport to being an airport you could reach only by flying from a connection in Detroit, Cleveland or sometimes Chicago. Under the new spoke model none of the national carriers give a hoot about adding a flight to Toledo because it is not seen as a destination city and there is not enough travel leaving Toledo to justify a direct flight pattern.
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Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
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