Hold on to your shorts-it is going to get worse

[greatam]

Pretty good article on the future of domestic AND international air travel.

 

http://www.iht.com/articles/2008/06/27/business/shrink.php

 

Note the paragraph: "At least one major carrier could liquidate, ATA has warned".

 

I'm betting it is United. Anyone else want to take the bet????

[dforeigner]

What, Congress is not going to bail them out again like they did after 9/11?

[Nonna and Papa]

This was the lead story on World News tonight, about 10 days to two weeks ago. At the time I heard it, I was hoping we were just hearing dire predictions from people who talk for a living. But with another report coming out, I guess we can expect some truth to the predictions, and that we'll feel the pinch soon.

 

Where will all this end?

 

Mary

[CRUZIN BRAD]

Greatam - Your comment about United caught my eye. Since you are among the more experienced on here, let me ask you a question.

For a flight near the end of 2008, would a better option be United or US Air (burning FF miles)? I guess I am asking in your opinion, who do you feel stands the better chance to be operating?

[greatam]

This was the lead story on World News tonight, about 10 days to two weeks ago. At the time I heard it, I was hoping we were just hearing dire predictions from people who talk for a living. But with another report coming out, I guess we can expect some truth to the predictions, and that we'll feel the pinch soon.

 

Where will all this end?

 

Mary

 

What is different and definitive-ATA stating publicly that 100 airports will loose service this year and more airports next year. More and more people will have to drive 3 or 4 hours to get to an airport.

 

Also, the difference between US carriers and European carriers (which you very rarely hear on US news). European carriers as a general rule charge enough to at least cover costs. Americans have had a free ride (cheap air fare) for a long time. It is now time we have to pay the piper.

 

"Unlike most of their U.S. competitors, European airlines are able to insure against escalating fuel costs, and a much larger proportion of their flights serve lucrative routes."

[nho9504]

Pretty good article on the future of domestic AND international air travel.

 

http://www.iht.com/articles/2008/06/27/business/shrink.php

 

Note the paragraph: "At least one major carrier could liquidate, ATA has warned".

 

I'm betting it is United. Anyone else want to take the bet????

 

UA Airways seems to be more in danger than United.

[chipmaster]

Pretty good article on the future of domestic AND international air travel.

 

http://www.iht.com/articles/2008/06/27/business/shrink.php

 

Note the paragraph: "At least one major carrier could liquidate, ATA has warned".

 

I'm betting it is United. Anyone else want to take the bet????

 

At every turn it gets worst, do you price your fares for 125 dollars a barrel or 150, 170 do I hear 200. Or is it all a mirage and it is like the electricity run up during the Enron days, and we'll be at 75 bucks by 2009?

 

http://www.marketwatch.com/news/story/opec-president-reportedly-sees-oil/story.aspx?guid={C21A68F2-0A15-4ADB-BE6A-9A18B41642EF}

 

Some executives will look like a genious and others well they will be former airline executives :D

[greatam]

Or is it all a mirage and it is like the electricity run up during the Enron days, and we'll be at 75 bucks by 2009?

 

Enron CONTRIBUTED, but true lack of capacity was a larger contributor.

 

Power traded on the Western Exchange at $173.00 per megawatt Friday. Not far from the $200.00 per meg Enron heyday. Slightly more capacity, but suppliers are having a hard time getting power into California due to lack of transmission lines.

 

Without new supplies and new refineries OR a major recession in the WORLD, oil prices are destined to stay high in the USA. There are too many people in the Far East that are purchasing cars for the first time in their lives. And China is stockpiling EVERY drop of oil it can get its hands on. Tank farms to store the oil are sprouting up everywhere. We subscribe to Jane's Intelligence reports and they posted pictures of all the tank farms sprouting up in China. I can't post a link because the pictures are subscription based. But maybe the pictures are available elsewhere on the web.

[greatam]

UA Airways seems to be more in danger than United.

 

US is cash heavy. And if Dougie keeps his hands out of the cookie jar, US should be OK.

[jaspercat]

What is different and definitive-ATA stating publicly that 100 airports will loose service this year and more airports next year. More and more people will have to drive 3 or 4 hours to get to an airport.

 

Also, the difference between US carriers and European carriers (which you very rarely hear on US news). European carriers as a general rule charge enough to at least cover costs. Americans have had a free ride (cheap air fare) for a long time. It is now time we have to pay the piper.

 

"Unlike most of their U.S. competitors, European airlines are able to insure against escalating fuel costs, and a much larger proportion of their flights serve lucrative routes."

 

Not trying to being funny here -- but in Canada we've had this 'problem' for years! Had 2 carriers, one owned by AA but Federal gov't wouldn't budge on not helping the federally-owned airline alive so allowed a buyout. Cost a lot of people there jobs, plus closed airports and/or reduced routings everywhere. Air Canada still running, not always profitable - but basically that's all we have. We have WestJet, but they don't fly direct to alot of places so people won't fly them. They occasionally are cheaper than AC, but when it's within even a $100 people will fly the direct flight. Our airfare is and has been very high for a very very long time. It's cheaper for people from Europe to fly to Canada and/or the US than it is for us to fly within our own country. Flights to US ports are getting less and less. Even now with more US carriers allowed to fly in/out of Canada choices aren't that great. We can't fly direct to most US destinations even though we have US Customs Clearance within our airports. (Don't forget, US carriers cannot fly domestic flights within Canada -- only Canada to US or vice versa.)

 

Example, current Air Canada rate for a direct flight from Ottawa to Vancouver for end-May 09 is 1,2++Cdn. Someone from London England can fly to Vancouver for approx. 1,000Cdn.

 

Seat selection -- we've been paying for a long time for that option unless you're booked business or full-fare. If you want a cheap seat and/or seat sale -- than you're picking your seat at the airport. Good Luck with that!!

 

Baggage allowance -- yea, they've changed that too -- but us Cdn's just say "ok, thank you taking it anyway"!!

 

For a lot of Canadians, Air Canada is their only choice - always has been and most likely always will be. They've been paying the pipe for years -- get used to it folks.

[jaspercat]

US is cash heavy. And if Dougie keeps his hands out of the cookie jar, US should be OK.

 

Where would this leave Continental? I have flights booked w/them via Cruise+Air (RCCL) for my Grandeur cruise. Checked the status of them yesterday only to find the Ottawa-Cleveland and Cleveland-Ottawa legs no longer there -- Only the Cleveland-Tampa-Cleveland. My Ottawa flights are no longer offered period!! Don't know why the whole reservation wasn't cancelled 'cause I can't get to Cleveland from here in time to make the existing flight -- nor would I want to now. Option is to go back to the Air Canada flights via Toronto (a longer flight due to the longer connection/wait times) or perhaps Continental via Newark -- about the same flight/layover as TO but leaves a bit earlier and gets into Tampa 1/2 hour earlier. Clearing US customs in Ottawa, versus having to retrieve bag, walk a gazzillion miles in TO airport to clear there. So interested in knowing if they are solid or not?

[kenish]

Air Canada still running, not always profitable - but basically that's all we have. We have WestJet, but they don't fly direct to alot of places so people won't fly them.

 

Interesting post. Our local airport, John Wayne / Orange County (SNA) has an annual cap on flights and passengers due to very tough noise restrictions. The demise of Aloha has opened up "slots" at SNA. Air Canada and Hawaiian are first on the list and they have already confirmed non-interest. Westjet, Virgin America, and AirTran are next in line; it will be great if Westjet starts service. Speculation is they could fly YVR and maybe YYC to SNA. There are affluent skiers, cruisers, and Disney vacationers who are willing to pay a premium to avoid LAX. (Aloha had no problem filling their planes, even at a fare premium because it was so convenient. Part of their downfall was expanding to routes that were not as high-yield.) I was hoping for AC, but even Westjet would be great!

[jaspercat]

Interesting post. Our local airport, John Wayne / Orange County (SNA) has an annual cap on flights and passengers due to very tough noise restrictions. The demise of Aloha has opened up "slots" at SNA. Air Canada and Hawaiian are first on the list and they have already confirmed non-interest. Westjet, Virgin America, and AirTran are next in line; it will be great if Westjet starts service. Speculation is they could fly YVR and maybe YYC to SNA. There are affluent skiers, cruisers, and Disney vacationers who are willing to pay a premium to avoid LAX. (Aloha had no problem filling their planes, even at a fare premium because it was so convenient. Part of their downfall was expanding to routes that were not as high-yield.) I was hoping for AC, but even Westjet would be great!

 

Virgin America/Virgin Airlines are making in-roads everywhere. He's a smart business man, plus a very vocal one. He takes things and pushes. In Canada he was instrumental in getting cell phone providers to allow "same number" regardless of the carrier. It was going to happen, he just forced it to happen sooner!!

WestJet is based in Hamilton. They do get great reviews for those that travel with them. So might not be bad thing if they went to SNA. But I hope they look at expanding the Cdn market (if they can -- AC does restrict where they can fly -- hence why a lot of northern areas are AC or their affiliate and direct routes with them may not be available). It's tough beating the Feds!!

Think AC is so tied to LAX that I would be surprised if they moved.

[SelectSys]

At every turn it gets worst, do you price your fares for 125 dollars a barrel or 150, 170 do I hear 200. Or is it all a mirage and it is like the electricity run up during the Enron days, and we'll be at 75 bucks by 2009?

 

Unlikely to get back to $75 / barrel in 2009. However, oil will likely crash again in a 10 years time as lots of new "green technology" comes on line and reduces depedence on traditional oil sources. The money is pouring in and the conditions are perfect for a switch (i.e., we seem to be at the tipping point)

 

See just a few of the following examples:

1) www.nanosolar.com (printing press style manufacture of solar cells)

2) www.fiskerautomotive.com (plug-in hybrid cars)

3) www.petrosuninc.com (algae-based bio fuels)

The list goes on and on ...

 

Most will fail but a few will win spectularly like Google, Microsoft, and Intel. The Saudi's are right to be afraid of high oil prices.

 

The good news is that the modern world won't come to an end and we won't need to go back and live in mud huts or caves!

 

My guess in 10 to 15 years time a whole new crop of airlines will be driving airline travel prices back down again. Maybe sooner if we are lucky!

 

...Power traded on the Western Exchange at $173.00 per megawatt Friday. Not far from the $200.00 per meg Enron heyday. Slightly more capacity, but suppliers are having a hard time getting power into California due to lack of transmission lines.

 

Without new supplies and new refineries OR a major recession in the WORLD, oil prices are destined to stay high in the USA...

 

Fortunately the California utilities are no longer prohibited from owning generation and entering into long term power contracts. These factors were significant contributors to the previous power crisis in CA.

 

GreatAm is totally right about infrastructure build out. Electric transmission capacity is totally constrained in CA causing price, reliability, and environmental issues. Our local utility, SDG&E, is attempting to build a transmission line to the desert to hook up to a proposed 600 mW solar plant in the desert. The plan is being held up from moving forward mainly based on NIMBY concerns.

[hmstins]

Great posts. Yes, China is gobbling up lots of oil, but please don't forget India. They are ready to come out with a very cheap car that will be affordable in India -- gasoline engine, of course. Their demand will skyrocket, making a tight market even tighter. We in the US have been spoiled for many years and are just now beginning to understand GLOBAL situations, not just US situations. We can't always have everything we want at the price we want. The price to pay is driving less, flying less or less easily, driving smarter (types of car, total mileage), etc. Yes, I do believe it will get better, but I agree with the 10-year picture.

[pms4104]

Great posts. Yes, China is gobbling up lots of oil, but please don't forget India.

There was an item on national news last week that each American uses the equivalent of 25 barrels/year ... people in China and India account for no more than 2 barrels/person/year. Granted, much higher populations there than in the U.S. ... but it does make us look like oil gluttons.

[pms4104]

Pretty good article on the future of domestic AND international air travel.

 

http://www.iht.com/articles/2008/06/27/business/shrink.php

 

Note the paragraph: "At least one major carrier could liquidate, ATA has warned".

 

I'm betting it is United. Anyone else want to take the bet????

Interesting read.

 

I concur ... Untied will be the first to go. I question if they'll even make it thru the year.

[greatam]

There was an item on national news last week that each American uses the equivalent of 25 barrels/year ... people in China and India account for no more than 2 barrels/person/year. Granted, much higher populations there than in the U.S. ... but it does make us look like oil gluttons.

 

The USA uses oil for much more than powering our cars-heating oil, 1M + commercial over the road trucks, 14M delivery trucks/short haul trucks, fuel for our power plants, plastics and pellets for injection molding (most sent to China), etc. etc. .

 

China (I don't know about India so much) uses SOFT coal for just about everything-heat, power plants. Other than commercial trucks (which are few in China), they don't use much oil per person YET. China is adding 1200 NEW cars per day. Those aren't replacements, those are sold to people who have never had a car. Freight intra China is shipped in large part via rail. Trucks pull containers to and from the ports (which are generally within two hours of major cities).

 

The news makes it sound like we suck up all the oil. But China is BUYING all the oil it can. Does it need so much oil???? No, they are stockpiling it. Just one more nail in our coffin. With all the new refineries China is building (with NO environmental regulations and NO NIMBY's), they will soon be selling our own oil back to us. When will we get it?????

[pms4104]

The news makes it sound like we suck up all the oil. But China is BUYING all the oil it can. Does it need so much oil???? No, they are stockpiling it. Just one more nail in our coffin. With all the new refineries China is building (with NO environmental regulations and NO NIMBY's), they will soon be selling our own oil back to us. When will we get it?????

So, for now China owns much of our debt ... and in the not too distant future, when they become a major oil supplier to us, they'll just about own America.

 

I'm guessing, tho, that there aren't a lot of Hummers and sport utes being introduced to the people of China and India. I believe our populace could be doing more to conserve/not waste such an exhaustible resouce. I understand that much of our goods are transported by truck ... but that is only part of the picture.

[greatam]

 

Fortunately the California utilities are no longer prohibited from owning generation and entering into long term power contracts. These factors were significant contributors to the previous power crisis in CA.

 

Please tell me what you are referring to. California utilities have owned generation capacity for years. Edison owns 1/5 of Palo Verde Nuclear plant (largest in the US and where DH works-built in 1976), City of Los Angeles Water and Power has owned generation capacity since my father was Superintendent of Light and Power in the 60's. Huntington Beach and Long Beach Water and Power even had those old crappy power plants built in the '30's. AES bought the Huntington Beach plants at least 10 years ago, because it was in 2000 that they applied for the permits to retrofit the plant and restart units 3 and 4.

 

 

GreatAm is totally right about infrastructure build out. Electric transmission capacity is totally constrained in CA causing price, reliability, and environmental issues. Our local utility, SDG&E, is attempting to build a transmission line to the desert to hook up to a proposed 600 mW solar plant in the desert. The plan is being held up from moving forward mainly based on NIMBY concerns.

 

The Devers/Palo Verde line, which will send power to California from Palo Verde and FIVE new gas fired, combine cycle co-generation plants, (two of which are owned by California companies), has been stalled for 4 years because of environmental concerns. The power lines are already there and the right of ways have been in place for years. The new transmission lines will run parallel to the current lines, just to a new substation outside Palm Springs. The substation seems to be a MAJOR concern. It's in the middle of the desert, at least 3 miles from the closest house. Another case of the California environmental lobby, using their many computers and driving their electric cars, fighting tooth and nail to NOT provide the very energy they need to sustain their "green" lifestyle. It's going to take a really long extension cord when your electric car runs out of juice between Indio and Blythe. STUPID, STUPID, STUPID!!!

[jaspercat]

The USA uses oil for much more than powering our cars-heating oil, 1M + commercial over the road trucks, 14M delivery trucks/short haul trucks, fuel for our power plants, plastics and pellets for injection molding (most sent to China), etc. etc. .

 

China (I don't know about India so much) uses SOFT coal for just about everything-heat, power plants. Other than commercial trucks (which are few in China), they don't use much oil per person YET. China is adding 1200 NEW cars per day. Those aren't replacements, those are sold to people who have never had a car. Freight intra China is shipped in large part via rail. Trucks pull containers to and from the ports (which are generally within two hours of major cities).

 

The news makes it sound like we suck up all the oil. But China is BUYING all the oil it can. Does it need so much oil???? No, they are stockpiling it. Just one more nail in our coffin. With all the new refineries China is building (with NO environmental regulations and NO NIMBY's), they will soon be selling our own oil back to us. When will we get it?????

 

And here Canada sits, a very oil-rich country also paying through the nose to get what we produce -- why -- EXPORT!

[greatam]

So, for now China owns much of our debt ... and in the not too distant future, when they become a major oil supplier to us, they'll just about own America.

 

I'm guessing, tho, that there aren't a lot of Hummers and sport utes being introduced to the people of China and India. I believe our populace could be doing more to conserve/not waste such an exhaustible resouce. I understand that much of our goods are transported by truck ... but that is only part of the picture.

 

Hummers aren't made in China but the new rich are importing them by the bushel. I have been amazed every trip I go to China how many "rich" cars there are. More and more every trip.

 

The new Ford plant in Chonqing only makes 1970's technology available in the cars it produces in China. Even though they make relatively small cars, they actually get not much better fuel mileage than a US built 2006 Chevy 1/2 ton pickup. The Focus like car sold in China is rated at 27MPG (less than the US built Focus). DH's pickup is rated 22 MPG. And DH's pickup burns MUCH cleaner. The 70's technology was cheap and not very good-one big reason it is in the Chinese Fords. The cars in China pollute MUCH more than those in the USA.

[SelectSys]

Please tell me what you are referring to. California utilities have owned generation capacity for years. Edison owns 1/5 of Palo Verde Nuclear plant (largest in the US and where DH works-built in 1976), City of Los Angeles Water and Power has owned generation capacity since my father was Superintendent of Light and Power in the 60's. Huntington Beach and Long Beach Water and Power even had those old crappy power plants built in the '30's. AES bought the Huntington Beach plants at least 10 years ago, because it was in 2000 that they applied for the permits to retrofit the plant and restart units 3 and 4.

 

Deregulation and the crisis largely mainly impacted the IOU's and not the muni's and Coop's. LA DWP, SMUD and muni's made a ton of money in the crisis selling power into the grid during dereg.

 

I would have to dig up the state regs but look at the wikipedia article for a summary of the crisis including the sale of generation by the IOU's: http://en.wikipedia.org/wiki/California_electricity_crisis.

 

"The deregulation called for the Investor Owned Utilities, or IOUs, (primarily Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric) to sell off a significant part of their power generation to wholly private, unregulated companies such as AES, Reliant, and Enron."

 

The nuclear plants I know were exempt. SCE and SDG&E kept San Onofre and PG&E kept Diablo Canyon ,but the direction to the IOU's from the PUC was to get out of the generation business and only provide distribution services for independent power providers and energy marketers. SDG&E sold off all their other main generation at Encina in Carlsbad and South Bay in Chula Vista. This has now turned around and SDG&E is building generation again including the recently completed Palomar Energy Center and other facilities.

 

Another case of the California environmental lobby, using their many computers and driving their electric cars, fighting tooth and nail to NOT provide the very energy they need to sustain their "green" lifestyle. It's going to take a really long extension cord when your electric car runs out of juice between Indio and Blythe. STUPID, STUPID, STUPID!!!

 

 

Actually the new plug-in hybrids solve this problem. The first 40-60 miles are covered on the battery and then a generator kicks in to provide the power. This lets commuters run almost exclusively on battery power and gas for longer trips. GM calls these types of hybrids Range Extended Vehicles. Their Volt is due out in 2010. If GM pulls it off they will be back on top of the world... Here is a link to a fan site: www.gm-volt.com

 

Green and growth don't need to be mutually exclusive. High oil prices will drive a new solution that just happens to be cleaner.

[SelectSys]

Great posts. Yes, China is gobbling up lots of oil, but please don't forget India. .... US have been spoiled for many years and are just now beginning to understand GLOBAL situations, not just US situations...

 

Correct, India and China with 3 billion people compared to the traditional US/Europe/Japan with 1 billion people will largely dictate future energy consumption, polution, global warming, etc.

 

China (I don't know about India so much) uses SOFT coal for just about everything-heat, power plants. Other than commercial trucks (which are few in China), they don't use much oil per person YET. China is adding 1200 NEW cars per day. ... The news makes it sound like we suck up all the oil. But China is BUYING all the oil it can. Does it need so much oil???? No, they are stockpiling it. Just one more nail in our coffin. With all the new refineries China is building (with NO environmental regulations and NO NIMBY's), they will soon be selling our own oil back to us. When will we get it?????

 

As the Chinese get richer they will likely switch as well to cleaner energy sources. They, like the French, are investing in Nukes big time. Regardless of progress, I expect to see China as the world's #1 polluter and emitter of green house gases in a decade. India will probably be #2 if their economy continues to perform well.

 

The good news is that these problems are creating incredible economic opportunities for entrepreneurs to solve!

[tomko2]

And here Canada sits, a very oil-rich country also paying through the nose to get what we produce -- why -- EXPORT!

 

 

JasperCat, did you see the latest list of route suspensions and outright cancellations for Air Canada! No more Ottawa-Orlando direct flight; no Toronto to Rome during the winter, etc., etc.

Kathy:(