Fuel

[Jack57]

Isn't this story getting a little old?

Isn't this just scare-mongering?

Where is our pay rise?

[N1 Vibes]

Jack57,

see BA's alleged reaction to this "story/scare-mongering" as you put it - published in the Times newspaper:

http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article3953811.ece

BA to Ground Part of Fleet Oct '08 Due Rising Fuel Price - another PP thread here:

http://www.pprune.org/forums/showthread.php?t=327377

CX/KA not shy of parking aircraft either - SARS 2002.

Regards,

N1 Vibes

[Jack57]

Thks N1

Why not just increase the price of a ticket??

(Pardon the ignorance if a simple answer only needed)

[Freehills]

They have, BA fuel surcharge for long haul is now over 300 USD for a round trip. But that means that fewer people fly, so fewer flights required.

[cpdude]

Where are we now...DEFCON 2?:E

[Liam Gallagher]

Last week TT stated that frequency may be cut to ULH destinations where the fuel surcharge is low or lagging the market, with aircraft redeployed on Short Haul where fuel is less of a factor. Having read a few missives from "The Management", I read this as an unveiled threat to the HK govt along the lines of.. "sort out the Fuel Surcharge or else".

Like others, I don't understand why they just can't put the airfares up. Whenever I go online the airfares seem to change by the hour as the booking change up/down.

CNBC was reporting today that weekend direct flights from TPE to the Mainland will start as early as next month and in response China Airlines will trim it's TPE -HKG schedule by up to 20%. I understand that CX has seen this coming, but nonetheless, it cannot be good news.

Seems that in a few months overtime will be but a dream:rolleyes:

[Apple Tree Yard]

,,,ooohhh, aren't we scared little rabbits then...? To clarify a bit, BA just agreed a dividend payout for the first time in years. If you were 'really' worried about fuel costs, you wouldn't be giving away the best part of a billion USD to your shareholders. Secondly, I don't really care to hear TT lamenting about fuel prices day in and day out to the employees. Why, because that has nothing to do with how I operate the A/C. I'll sort out 250/Mamas...he can figure out how to charge enough to pay for the fuel. Perhaps he and his cohorts could have realised that squeezing us over the past years of record revenue would eventually lead to this situation where they not only have to pay for fuel...but also pay for crew. Geniuses, really, all of them....

ps. when airlines less profitable than us start hitting their crews in the wallet, then i'll listen. Until then, we all expect our long overdue pay rises. For info TT, Delta just agreed 17 % plus another 3 % per year for 3 years, plus equity in the airline. Emirates also just increased pay for it's aircrew. Times are tough all over. :ok:

[ALPHA FLOOR]

With you on that ATY! Well put -

RESPECT,
AFL

[bobrun]

http://www.theglobeandmail.com/servlet/story/RTGAM.20080519.woilana0519/BNStory/energy/home

Fuel prices driven mainly by speculators with a market heading for a fall in prices; sounds like the Hang Seng!

[trevfly]

KA to reduce Euro bound freight flights, but is keeping a 744 back from dry lease just incase!
Historically, flying is still good value compared with the days prior to deregulation. Can still fly to Europe for $3999 + tax ` hk$6000 which is less than when I arrived here wiv oil @ $30/barrel!!

Managers will always preach doom and gloom, then increase their bonus. And dont forget record profits for SQ, EK, BA and oh yes, 7 billion for you know who

[Shep69]

Everyone faces high fuel prices. They are a cost to be passed along, just like the climb of the price of any raw material in any industry. Some truckers were striking and complaining when they would have been better off just saying "well, we're just going to raise our prices to keep up with the rising fuel costs" Fuel costs represent opportunity as much as risk. More so opportunity if you run an efficient operation compared to your competitors.

[Arfur Dent]

Not that long ago, fuel was $17 a barrel. Certainly within 2 years. Anyone know what is driving this latest spiral of the price? I didn't think OPEC were restricting production (the normal reason for a hike) and punters are now suggesting $200. If you've done all your sums at,say $50, then $200 is going to cost some airlines their very existence.Hedging only works for a reatively short period too. Economies around the world are going to be plunged into chaos (it already costs me over $200 to fill my 4x4 with Diesel in Wales UK).
Others I heard are saying oil will be back below $100 by year end. Let's hope so.......:confused:

[water check]

An understanding of the commodity markets suggest that oil will quickly start dropping back from it's current highs. Sub 100 fairly quickly, then a slower decent back into the 70's / 60's. Bear this in mind when TT starts bleating each Friday about the price of fuel. If we have a couple of bad quarters as an airline, THEN he can start to whimper a bit...but not interested in hearing it until then.

[Kitsune]

For all of you optimists:

http://news.bbc.co.uk/2/hi/business/7396866.stm

My commodity market leveraged funds have just matured and make KJPs' bonus look like an S/Os' pittance.........:}

[Shep69]

High fuel prices can actually contribute to an airline doing well and making profits -- given proper fuel hedges, a good cost structure, pricing commensurate with costs and desired profits, and an efficient operation. All airlines (and, indeed, all transportation modes) will face this increased fuel cost -- the higher operational cost actually accentuates the opportunity for efficient operation, resource acquisition, and pricing over that of competitors. The only risk you run is potential underutilization of your capital; if you're smart you can mitigate the impact of this as well.

What you can't do is let your competitors set your price--you need to raise your prices to preserve a profit margin as your operational costs go up. Not doing this (as well as complex pricing schemes) have resulted in the demise of many American air carriers.

[willnotcomply]

QANTAS faces a $50 million class action from hundreds of disgruntled travel agents who claim the airline has short-changed them by not paying commissions on fuel surcharges.

Plantiff law firm Slater & Gordon filed a statement of claim in the Federal Court on Friday, saying Qantas, Air New Zealand, Singapore Airlines, British Airways, Cathay Pacific and Malaysia Airlines owed 1450 travel agents $80 million in unpaid commissions dating back to May 2004.

The suit claims the airlines breached the Trade Practices Act by requiring agents to book fuel surcharges in the commission-free "taxes, fees and charges" section of an air ticket.

Slater & Gordon lawyer Steven Lewis said it was unlawful because a fuel surcharge was not a tax but rather a "disguised air fare increase".

"These airlines have decided travel agents include the surcharge in the tax box," said Mr Lewis. "But it's not a tax."

The action follows a successful legal action by travel agents in Britain to force airlines to pay commission on an airport-related passenger service charge.

[On the beach]

The problem with fuel is that it is a finite resource and we are rapidly reaching the point where demand (led from China and India) will exceed the oil industries ability to pull it out of the ground quickly enough. The reason OPEC isn't increasing their production to help George Bush out is simply that they are sucking oil out of the ground as fast as they can.

What's the future? Well in the next 12 months oil at $200 a barrel and a growing number of parked aircraft behind the Tower. In the next 5 years, a growing trend to aviation carriers moving into the business only model (they will be the only people able to pay the new fares) and a slow disappearance of low-cost carriers.

After that? Who knows. We need a breakthrough in alternative energy. At the moment I don't see a substitute for oil to power aircraft. That's not to say there won't be one. Just, I don't see it yet. Kind of puts pay demands into perspective doesn't it?

On the beach

[Apple Tree Yard]

A little known fact about pilot pay. A few years ago a close friend was involved in helping set up a small commuter airline. Using the main spreadsheet, you could increase or decrease the pilot pay number by a factor of 2 (ie: half the pay...or double it), and the overall difference in budget cost for the whole airline changed by about 5%. Our pay has very little effect on the overall budget of the airline. Don't let TT try to suggest that OUR pay is the answer to the problems of the airline. As was said earlier, the airline reaps what it sows. They have been cutting our pay and benefits (in an inflation adjusted, and many of us, real sense) for many, many years, even when times and profits have been great. Don't bother coming after me for any more now. I expect and insist upon the company making up for all they years they have taken from my family and I. Fuel at 150 a barrel....oh well, better start charging more for the tickets. I am not paying for the company's fuel. ATY

[Frogman1484]

As they have openly stated to the AOA that they are not interested in keeping our pay indexed to inflation (hence no increase for 8 years), therefore I'm not interested what they are paying for fuel!!!

[Fly747]

We do need to worry about fuel though.
A 744 is now burning US$7000 worth of fuel an hour more than last year or about US$14000 total an hour. That is approx US$20 per pax per hour extra or US$40 total. Work that out for our routes and ask who is going to pay. Either we get the pax to pay it or lose a lot of money. If we ask the pax to pay then fewer will travel and we will have to park aircraft.
A tonne of freight burns roughly 2 tonnes of fuel to get to the US and fuel is a higher proportion of Direct operating costs for freight. I doubt that we need all those new freighters now.

[Shep69]

Pass the costs along

Wait for the market to stabilize

Decide at that stage if you need to park jets. The only issue you have at that point is the relative cost of fixed capital assets. Everyone in the industry will face this including your competitors. Everyone in the world will face inflation and higher transportation costs.

If you choose not to pass the costs of materials along, no matter what sector you're in, your company will not survive in the long run.

The concern is operating as efficiently as possible. This will give you an advantage over competitors. Just like in poker, whether you win or lose depends on how you play your cards.

[Frogman1484]

Here is a prediction of the oil bubble to burst by end 2008 http://www.news.com.au/business/story/0,23636,23754398-462,00.html

[On the beach]

Here's a prediction of the oil prices made back in 2005!!!

http://www.forbes.com/2005/01/10/cx_da_0110doomoil.html

On the beach

[2longhk]

If the cost of fuel is so important maybe it would be cost affective to show the people who have influence on the amount we use some good will.
Whilst pilot salaries amount to a small percentage of costs a small change in fuel burn could amount to a lot.