Tuesday, May 20, 2008

British Airways to Cut Flights by a Half.

Now here's one we've touched on before - that matter of how on earth is the airline industry going to expand its number of flights three-fold by 2030, in the face of peak oil. What exactly are they going to put into the planes by way of fuel? We have the third runway at Heathrow Airport under discussion, and Terminal Five in actuality - but for how much longer will these ventures serve purpose?

Confirmation of the latter conundrum is now exhibited by a recent analysis to the effect that British Airways (BA not AA) are now scheduled to slash their number of flights by a half. BA has made a designed cut of the price of its transatlantic flights, which now amount to a mere £249 to fly from London to New York. Nor bad: perhaps I will make that trip to the US, as suggested over there, to promote my novel, which has just been accepted by a publisher. It is an acerbic black comedy entitled "University Shambles" based around the disintegration of the British University system, which I gladly abandoned to set up my own consulting business 5 years ago, which has done pretty well, all things considered.

"It is a bloodbath", so one airline industry senior has allegedly said, in reference to the squabble among airlines who are now vying among themselves to offer the cheapest flights. It is, of course, the price of fuel that currently is responsible for this trend and inevitably will be the determining factor in the future too. If the cost of oil persists at above $120 a barrel (and I see no alternative to this, working on the basis that its elevated price is a consequence of it being harder and more exacting to pull the stuff out of the ground, and to refine high-sulphur "sour" crude) then BA is expected to lose its profits this year. A real headache indeed, but no surprise really.

I keep hoping that peak oil is a big hoax, as some conspiracy theorists claim, probably in the addicted denial of the cataclysmic change in the Western way of life that is imminent, but increasingly the evidence is in support of a rapidly consigning "Oil Dearth Era".

Interestingly, Sir Richard Branson (Virgin Airlines, among other of his many and successful enterprises) is now endorsing an imminent $200 price tag on a barrel of oil, and this will hit his businesses too - both air and rail-borne. Sir Richard reckons this will come by 2010, and I predict it will be with us by the end of next year (2009). Virgin Atlantic's fuel bill has increased by 70% in the past year.

Related reading.
[1] "British Airways will ground part of its fleet over rising fuel cost." By Dominic O'Connell. http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article3953811.ece
[2] Sir Richard Branson: $200 oil on way. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/18/cnbranson118.xml

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