Hence the recent chops in US aircraft fleets should make you very nervous.
I thought that this thread was aimed at the English student pilot?
The UK is in Europe, right?
Huge cuts in the US don't mean huge cuts in Europe.
Oil...
People are trading oil contracts...which means they are buying and reselling contracts that result in delivery of a certain volume of oil at a given date.
Oil is like any other business and is very similar to airline yielding systems:
Example:
Aircraft type A321 - 200 seats
Flight: LHR-GVA
Case 1: If sold at 100£ return, average load factor is 85%.
Case 2: If sold at 150£ return, average load factor is 70%.
Case 3: If sold at 200£ return, average load factor is 40%.
Case 4: If sold at 300£return, average load factor is 20%.
Oil works in the same way. The more prices increase, the lower the demand.
When oil prices go above a certain threshold, demand will decrease so strongly that those who hold oil contracts will no longer be able to sell their contracts. They will then sell these contracts in desperation at very low prices, because they need to get rid of the oil before it reaches delivery date. Otherwise, they will need to store that delivered oil and that's gonna cost them way more than their contract is worth.
When oil storages reach their peak limits, demand will decrease very strongly and that's when is going to happen.
Our airfield's fuel supplier BP said that they have plenty of fuel available in storage. Regardless of that, the reason why they're selling it at high rates is because of the market.
There's plenty of ways to restore equilibrium:
-the OPEC way that I explained before
-the suffering automobile industry comes up with viable alternatives (there's no better time to convince people!!)
-common sense in politics with removal of personal interest and corruption
-UN imposes measures in the Middle-East that are fair to all parties, restoring peace and stability.
Why Europe and Asia will not suffer as much as the US:
-Strong currency (except for the UK of course)
-Less addicted to oil, habit of coping with high gas prices (fuel efficient cars, etc...)
-More margin for adjustment (VAT, excise taxes can be reregulated)
-Fair relations with oil countries, limited support & involvement in oil wars (except for the UK of course)
Don't read the news as it is.
I couldn't stop laughing when I heard the Gazprom guy say that oil would rise to 250$ very soon.
The US is in a crisis and it is trying to take the whole world with it. The UK is willing to sacrifice for their brother from another mother.
Let's settle down and look at the traffic figures for April:
http://files.aea.be/News/PR/Pr08-019.pdf
Capacity, traffic and pax number increases in all sectors except European domestic routes (which are by the way tackled by developing railway networks).
Oil prices are going to hurt airlines' profitability and hence the ability to grow further, but in Europe we are still far from being where US airlines are.