Peak Oil News and Message Boards

I read in "der Spiegel" that the US economy cannot exist without the airlines. This was the statement of the air transport Association. If the airlines go bancrupt the economy will go down.

Der US-Luftfahrtverband warnte vor dramatischen Konsequenzen fuer die US-Wirtschaft. "Die Konjunktur dieser Nation ist mit der Funktionsfaehigkeit ihres Lufttransportsystems verbunden. Wenn es mit den Fluggesellschaften bergab geht, wird die Konjunktur ebenfalls abstuerzen", sagte James May von der Air Transport Association.

Here is the

link:In German[quote]

Is this exaggerated?

It's probably accurate.

The problem is not the airlines, but rather those who depend on the airlines. Tourism is a large industry that employees substantial numbers of relatively low-skilled workers. If the airlines fail, tourism is likely to decline. That decline would impact hotels, restaurants - and the budgets of cities and states that depend on sales taxes and hotel-motel taxes.

Tourism supposedly counts for 7 million jobs....

LINK

Jack wrote:It's probably accurate.

The problem is not the airlines, but rather those who depend on the airlines. Tourism is a large industry that employees substantial numbers of relatively low-skilled workers. If the airlines fail, tourism is likely to decline.
LINK

I think an argument could bed made that, if the U.S. has a tourism trade imbalance, such that Americans spend more money outside the U.S. than foreign tourists spend inside, it is possible that Americans coild spend more at home, say within a 300 mile radius of home. That may offset the impact of long distance tourists.

I'm sorry, Denny, I wasn't clear.

I was referring to U.S. domestic tourism. We have a great deal of travel within the U.S. - and cities depend on it.

There is, as you point out, international tourism, but it pales in comparison (for most cities within CONUS) to domestic tourism.

As for short-range car travel - yes, that's likely. Unless the economy continues downward...

Australia has a lot of tourism as well and this industry mi8ght fail, as most vistors are overseas, I believe.

But it is not only the tourism.

If that was true, there would be a lot more people in aerospace engineering instead of dot coms. Suspect airlines are paying to get more coverage. Seeing a lot more TV interviews being done in airplanes, as if the person was traveling too much to do an interview.

Tourism is not just built on airline travel,, its built mostly on expendable extra $$$$$,, with the cost of gas/food/utilities/etc going thru the roof there is going to a lot less expendable $$$$$ around and tourism is going slow down a lot,, here in Vegas we are now seeing our slow down,, the frist slow down in 10 years and it looks as if it might even get worse,, and to say that people will travel closer to home and that will help with there local tourism,, not here in Vegas, we have only 1.9 million people living here but 33 million travel here each year, if oil hits $250.00 a barrell Vegas will be a dust bowl....

America can do without the commercial airlines and their associated tourism. The economy here depends on the selling of mortgages, and the driving of automobiles.

g

It seems that EVERYBODY wants to argue that the industry they are working for is super critical to the well being of the entire universe so therefore the government should bail them out. I never knew truck drivers, airline pilots, and mortgage lenders would ever have something in common!

There have been many examples of government bailing out big business but I think this time it's different. Back in the days usually there would only be 1 industry coming to the gov. hat in hand begging for a bailout. Now it seems there's a dirty dozen different industries ALL trying to grab at the same economic pie. I don't think that's physically possible. Therefore that has to be a couple industries that will receive no help.

If I had to guess, I think society will choose to bail out airlines before trucking.

Basically in Canada almost all airlines eventually went out of business except Air Canada that used to be our national carrier. Now I think there is just West Jet and maybe a few charter airlines? Someone correct me if I am wrong? However, now as Air Canada is the defacto only airline, and is part of the Star Alliance, good luck finding a cheap ticket. Between Frankfurt and Calgary there is only Lufthansa and Air Canada. Both are in the Star Alliance, so the flight is a code share. No competition there.

Domestically there is also very little direct competition, unless you re-connect through a US airport I suppose. So domestic flights are also very expensive. But it is a vicious circle. As prices climb out of the reach of travelers the airline is forced to cut back on routes and the number of flights. As flights become more expensive would-be travelers stay home. Travel for most is still a luxury item. But there are many substitutes, so demand is very elastic. The high end of tourism will always exist. But it is the mass tourism that depends on cheap flights. And the masses ain't doing very well lately.

Every single flight I am on is completely full of business travelers and I fly a lot. A lack of affordable air travel is one more huge blow to the US economy, but I don't think it's tourism necessarelly, it's legions of sales and customer service people.

30 years ago, a lot of businesses had a hard time buying goods or services from a non local outlet. Since then, customers have become comfortable with using a non local vendor. I think this was in large part due to lowered prices and competition between airlines which made flying relatively cheap. Company representatives, technicians, etc, could fly out on a moment's notice to take care of issues quickly.
With vastly reduced flight schedules and high prices, that will no longer be possible and I think it will have a huge dampening effect on the economy.

"Those airlines can't offer low fares to that degree which will stimulate net new traffic because the fuel cost component of offering a fare is so high..."

Passengers are witnessing the end of an era of cheap airfares as record-high oil prices erode travel demand and reshape the world's airline industry, says Robert Milton, chief executive officer of Air Canada's parent company.

Discount carriers are suffering more than most, but all airlines are feeling the heat from oil prices that have surged beyond $140 (U.S.) a barrel, Mr. Milton said yesterday after ACE Aviation Holdings Inc.'s annual meeting in Montreal.

"This one is a truly global issue, and I think you're going to see a lot of airlines disappear," he said. "The ones who are going to really have a problem are the airlines that have been trying to sell a low-fare proposition."

Some carriers, especially those in Europe, revolutionized the industry with cheap regional fares, but with jet fuel bills soaring, the no-frills business model has come under attack.

source: Oil costs will kill bargain airlines

I'm pretty sure we will see an effort by the US gov't to subsidize the airline industry. Otherwise, I don't see how we can have a functional system going forward into 2009 and beyond. Major failures by the airlines would ripple through the economy and also cause panic by US citizens.

I dislike the idea of spending tax dollars to subsidize airlines (which are producing so much CO2 and contributing to global warming and air pollution). I would rather see cleaner bus and rail systems subsidized. (or spend that money to build a clean transportation infrastructure) A lot of our air travel these days is not necessary, including some business travel that could be replaced with teleconferencing and the like.

I was looking to the airlines with passangers as an indication of the problem with peak oil. Now the ecomony is making sure the freight side is taking a major hit:

'Unprecedented' fall in air cargo

The International Air Transport Association (Iata) saw air cargo go into "freefall" in December, with a year-on-year fall of 22.6% in traffic.

The "unprecedented" figure is worse than the 14% drop after the 9/11 terror attacks on New York.
...
Iata says that during 2009 there will be declines of 3% in air passenger traffic and 5% in freight cargo carried.
...

About 35% of international goods trade is by air, says Iata. In 2008, cargo traffic fell 4% compared with a 4.3% increase in 2007, the body said, its first annual fall since 2001.

I presume the 35% figure relates to value of goods and not weight! Given the size of the fall in December, I think Iata is being very optimistic for 2009.

Also not good for Boeing's dream(liner):

Russia's S7 cancels order

Russian airline S7 has cancelled an order worth $2.4bn (£1.7bn) for 15 Boeing-787 Dreamliner aircraft.

It is the first airline to cancel a major contract for the 787.

"This birds not dead, he's just sleeping".

Peakoil.com is my dead canary.

Usually when a small group sounds an alarm and the masses choose to ignore it, it's usually too late.

Really?

On PeakOil.com, ostensibly the place where we all know just how important oil is to our lifestyle, no one is considering making any short term changes due to the fact that the arab world is in revolution - the same Arab world that provides somewhere around half of all oil exports?

Interesting.

Mine is like this:

We haven´t seen anything yet. Wait till the real bumpy road begins .