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The future of airlines


alonso
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http://business.smh.com.au/united-air-to-c...80624-2vqc.html

 

Just another headline out of many recently relating to the fallout for airlines of the oil crisis.

We're all familiar with how Qantas is cutting back on services.

 

Are we seeing the beginning of the end of mass air travel as we have come to know it over the past decades? Is it going to be back to crossing the Pacific in a flying boat for 5000 pounds or whatever it was? Will there be a resurgence in travel by ship or is that more fuel-expensive?

 

Be interested in your views.

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In reply to: alonso on Tuesday 24/06/08 10:36am

Interesting topic alonso...

Time Vs money is the biggest factor here as travelling by ship is very time consuming so there will be lots of business people that will still be using the airlines.

Interesting point is that lots of ships nowadays run Gas turbine engines which is the same as the aircraft we fly in.

They are also able to use different fuels as they are capable of multiburning.This brings the bio fuels info focus as airlines are now conducting tests using bio fuels and Air New Zealand is starting it's test shortly with fuel made from pond scum i believe. Virgin group is already conducting tests as well i have read.

The pace at which air travel has been accelerating of late there may be a slowing point but at this stage people are still willing to pay and with plenty of competition out there the airlines will be offering stiff competition to each other.

In many circumstances it is still cheaper and also safer than driving.

You can have no doubt that Boeing,Airbus and all the engine manufacturers are looking at the situation and they are already producing more fuel efficient aircraft.

Will be an intertesting time for the aviation industry.

V1

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QUOTE (alonso @ Tuesday 24/06/08 11:06am)

Hi Alonso

 

IMO it's not the end of "mass air travel"... It's the beginning of the end of "mass air travel powered by oil"

 

Have a look at the below link, they are already playing with the idea of planes powered by fuel cells.

 

http://www.horizonfuelcell.com/aerospace.htm

 

Cheers

Matt

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In reply to: mminion on Tuesday 24/06/08 12:27pm

This article illustrates, IMO, that if the demand side don't get them the supply side will.

The refernce to "dead men walking" tickles my fancy" (as the actress said to the bishop)

 

US airline industry is heading for more pain but rationalisation is better than protectionism: Peter Harbison | June 27, 2008

 

ON Monday, while Wall Street finished steady after a turbulent and negative previous week, US airline stocks plummeted again.

 

US Airways, in the steepest nosedive, saw its shares decline 19.4 per cent. But Northwest, United, Continental and Delta were not far behind, all well into double-digit falls. US Airways shares have now halved in value in just over a month, off an already declining base.

 

On May 22, we observed: "Something snapped yesterday in the US. The recent fierce upward spiral of oil prices has compressed months of change into a few short days. But on May 21 in the US, there appeared to be a tipping point. As if investors and consumers had been holding their breath for as long as they could - then let them out with a collective rush, as they realised oil prices were not in fact going to fall back soon."

 

The downturn really consolidated on May 21 and, with network airlines helpless to do anything about it, the decline has been remorseless.

 

But from crisis levels a month ago, it is hard to envisage what is now going on in the boardrooms of these airlines - or indeed in Washington. Even 90 days ago, no one could seriously have predicted the current situation. The cream of a US airline industry, built up over decades, with all the ingenuity and resourcefulness of an economic powerhouse, has apparently been brought to its knees.

 

Domestic merger talk has been exhausted. Continental and United stocks have been punished for talking of a lesser combination that just involves codesharing and a more limited partnership.

 

There appear to be few options other than market exit, at least for one or two of the suffering airlines. Chapter 11 bankruptcy, which US Airways must surely be staring in the face, can hardly help the industry overall. More likely, it would only make things worse as it involves a flow-on effect of harming other suppliers and competitors. There are already a number of dead men walking in the US industry, which contribute to undermining the viability of the ones who are efficient.

 

As a minimum, further capacity pruning would seem inevitable, and more aircraft parked, if only to keep investors at bay. But on the brink of the northern summer peak, is Washington ready to accept the prospect of major capacity cutbacks, particularly with an election near?

 

It almost seems irrelevant to consider medium-term solutions when conditions deteriorate to this extent. Short-term pain needs to be addressed. But US airlines are not just domestic, they are part of an international market: for aircraft, for passengers, for work skills. Part of the solution should, therefore, logically be international too.

 

International mergers and acquisitions apparently remain taboo for a seemingly insular US legislature, although it is to precisely that area that any "normal" industry would be looking now. A significant equity investment from a European airline, giving it some say in the running of the US airline, is something that will eventually occur - but for now, US popular nationalism will prevent it. Even restrictive bilateral ownership provisions would permit equity acquisitions that could rescue this situation.

 

On recent form, it is surely too big an ask for the US Congress to change direction and use the foreign ownership solution here.

 

So, more integrated airline cooperation then becomes attractive. To a greater or lesser extent, US network airlines have accumulated increasing codeshare and co-operative arrangements over recent months, as the US dollar fell and yields on foreign routes became much more attractive.

 

Where US airlines themselves could not put metal, they could at least co-operate, through codesharing and the like. But, for example, issuing comprehensive anti-trust immunity to American Airlines and British Airways would send all the right signals to the market - making it clear that anti-trust immunity will be granted more readily, where mergers are not acceptable.

 

In such a fragile market, even an acknowledgement from Washington that special circumstances exist might offer some protection from the cold winds of change.

 

But this environment has become so hostile that anything short of dramatic action will probably be ineffectual. The more likely outcome is (and some would say "at last") for US airlines to collapse. Twelve months from now the natural scenario is for Southwest and, at best, three network airlines to be left standing. That will mean a very different US airline industry. But it will involve a lot of pain.

 

And the process of getting there does not offer a pretty picture for aspiring presidential candidates, as they go about trying to be elected. A worry for the rest of the world is that one outcome would be for more protectionism, as the candidates vie for votes. This is not a time to be closing doors; the aviation industry needs rationalising.

 

For more strategic aviation updates, visit www.centreforaviation.com

 

Peter Harbison is executive chairman of the Centre for Asia Pacific Aviation

 

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In reply to: macduffy on Saturday 28/06/08 12:46pm

Well you ccould read it how you wish - either way you're not looking wrong!

But I have to admit that my feeling (or the basis on which I make most of my investments) is that while US & European airlines will increasingly be in trouble, Qantas will probably survive, as I say just a feeling.

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  • 2 weeks later...

article from today's SMH: I had suggested that the oil crisis would see a move away from air travel, but here's another perspective raised by the impact of global warming.

 

 

Postal chief sees freight returning to rail and sea

Email Print Normal font Large font AdvertisementJesse Hogan

July 7, 2008

 

THE international freight industry will face increasing pressure to cut back on flights and revert to sea and rail deliveries because of environmental concerns, the head of Australia Post predicts.

 

Australia Post's managing director, Graeme John, who will be chairman of an annual meeting this week in Queensland of nine of the world's biggest postal groups, said the problem of global warming would have an increasing influence on the way the global postal industry is run.

 

"One of the challenges in international logistics is going to be greenhouse [emissions]," he said.

 

Mr John said growth in international freight from consumer goods such as electronics had been managed on a "just in time" basis, with air travel preferred to other forms of transport because of its speed advantage. But that approach was no longer viable.

 

"Does the world want to absorb the greenhouse gas so that some kid can get his iPod a bit earlier?" he said. "In my opinion there's going to be somebody that is going to, in a mandatory way, say 'Change your supply chain' - put it on a ship or jazz up the transcontinental railways."

 

The postal groups meeting this week - Australia, the United States, Hong Kong, Japan, South Korea, Spain, France and Britain - are members of the Kahala Post Group, a consortium created five years ago to help them compete with private freight companies.

 

Mr John instigated the consortium because he "wanted to do something about the dominance of the DHLs and the FedExs and UPSs in the international parcel network", as did other former monopoly postal groups.

 

The Kahala group - named after a resort the members stayed at during their founding meeting in Hawaii - conceded they could not compete with the private companies on speed, so instead focused on reliability of delivery.

 

But to guarantee that reliability the Kahala members had to upgrade their tracking systems.

 

It also required the creation of a "delivery calculator" - a database of eight billion postcodes that allows a customer to walk into any postal outlet, list their destination and be told a precise window during which a parcel would be delivered.

 

While the private couriers already offered that certainty, and faster delivery, the Kahala members undercut their prices by 40 per cent to 50 per cent.

 

As well as pressure to shift towards less environmentally-damaging modes of transport, Mr John said a worsening economic environment could prompt a trend to slower "deferred" delivery services.

 

The Kahala partnership is also moving beyond postage, with Australia Post, China Post and the US Postal Service preparing to launch a group-owned money transfer service to compete against Western Union.

 

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In reply to: alonso on Monday 07/07/08 03:31pm

Interesting article but "8 billion postcodes" ... maybe due to the obesity epidemic, a postcode for every person on earth? Reminds me of when I asked my doctor daughter "Just how big does an enlarged prostate get?" Answer: "Huge, Dad, some of them have their own postcodes!" Very reassuring, great bedside manner..... http://www.sharescene.com/html/emoticons/puke.gif

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In reply to: bananabender on Monday 07/07/08 04:17pm

I reckon passengers should be checked in by weight.

 

Flew back from Hong Kong next to a passenger weighing 140KG aand me half his size had to pay because I had a few kilo of excess baggage. I think the excess baggage was sitting (and stinking) next to me!!!

 

I reckon anybody over 100kg should pay excess baggage. Anybody over 140 should pay for 2 seats. (He was in mine for 8 hours.)

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