Yesterday at LAX the spot price for Jet A Kerosene was a staggering $3.93 a gallon. Thats more than you are probably paying for the gas in your car and a 777-300ER holds 47,890 gal of the stuff. That's $188,000 for them to fill'er up. The same day in 2003, Jet A Kerosene was 74 cents/gal at LAX. So 5 years ago a 47,890 gallon tank o' gas was only $35,000. Now if you fig're the 777's hold 316 passengers fully loaded, if you simply divide the $188,000 tank of gas by 316 thats $595 per passenger if you took off from LAX and flew the 777 until it crashed into the ocean out of fuel. All kinds of complicated factors come into play but I think it is safe to say it would 'almost' make it to BKK from LAX without refueling so for the sake of argument say it now costs the airline $600 just for fuel alone ONE WAY LAX-Hong Kong. That's $1200!!! round trip per passenger just for fuel alone, never mind the cost of the plane, the crew or anything else. The economics are crystal clear. If fuel prices remain where they are now or continue to climb..... some airline is going out of business. Now does anyone on here want to make a suggestion as to who?
I am going to predict MESA is the next to close their doors. Following that I am going to guess United and US Airways will merge.
Yes. I suggest that you calculations of fuel per passenger are severely flawed. For example: "Fuel accounts for a third of an airlineâs operating cost per passenger, and is the second-highest expense next to labor." http://www.manilatimes.net/national/2008/apr/14/yehey/business/20080414bus1.html You suppose international flights cost a lot more just in fuel than they receive in ticket sales? Then why are US companies trying to expand internationally? If your statement were true, all airlines coulds become profitable just by not flying. Yet you can get a roundtrip ticket to manila from NYC for as little as $900, using the right agents. Sounds like you expect them to spend considerable more than $2400 just in fuel, not counting labor, logistics, planes, advertising and many other costs. Say it costs over $4000 roundtrip then and they receive $900. See the problem with your math??????????
I thought there was this thing that airlines use called hedging the cost of fuel - the one unknown variable in their business plan - so oil price rises would not affect them? Next bust airline? Pakistan International Airlines for their old, inefficient airplanes.
Delta will take on NWA and then United will take over US Airways - the mergers will continue as the airline industry is trashed by fuel prices and excess seat miles. United/USAirways are both totally broke, so I just dont see how these companies can make it much longer. BTW, only the airlines with cash can hedge fuel costs (in their trading accounts with their trading departments (like Southwest has) - most airlines have NO CASH to play fuel hedging strategies in trading accounts. http://en.wikipedia.org/wiki/Southwest_Airlines
Is there any good comprehensive reading about how exactly the airlines are hedging the raising prices of gas?
well how far out in time have they hedged??I would think their cheap fuel contracts are about used up.BTW,reg gas is 4.00 in LA...ive noticed a drop in traffic mania...yay....seems like 4$ is the tipping point.