I understand everything you posted and you may be right. Oil prices might never fall.
But "never" is a very strong word, and those who lived thru asset price bubbles and busts tend not to speak in such absolutes. The poorhouse is filled with fools who bet the wrong way on commodity prices.
That said, you're probably right. Oil probably won't fall in price.
Unless I bet real money on that view. Collapse would be just around the corner.
Good points - traders bet the wrong way on natural gas a couple of years ago and lost their shirts, their pants, and a few billion dollars.
Part of me hopes oil would go back down - I have a Land Cruiser in the garage that would concur. Then, the other part of me says it's about time we kick our oil habit, and the only way that seems to deter our behavior is higher prices. Unfortunately for AA (UA, DL, US, everyone) their industry cannot really stop buying jet-A. The good news about checked-bag fees, change fees, etc. is that the industry is focused on not repeating disaster from the 2002 days. And, fare increases are sticking, which sucks for customers but ultimately will keep the industry from expecting a gov't bailout (aka you) later on.
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Quote:
Originally Posted by YLU FF
I find it interesting to read these threads as someone living north of the border. A couple of thoughts I'll add to the discussion.
First, to Canadians, air fare in the US are ridiculously cheap. With oil at $130 a barrel, something has to give. Fares have to rise, services have to be cut and non-profitable routes dropped. It's a matter of survival and those who adapt the quickest win.
I think here in Canada, the two primary air carriers have known this for quite some time and have adapted their business strategy accordingly. Even Air Canada has adopted many Southwest-like strategies such as only awarding frequent flier points on higher fares, requiring payment for advanced seat selection on lower fares, etc. Both airlines increased fuel surcharges last week (up to $90 RT depending on the duration of the flight). Nobody likes it but it's the reality of the environment and both carriers are in much better shape financially than most US legacy carriers.
Secondly, high oil prices are here to stay. Although US demand is down, that is being offset by increasing demand, thanks to emerging economies like China and India. With a burgeoning middle class and strong economies, there are tens, if not hundreds of millions of consumers looking at purchasing vehicles. Unless the price of oil pushes these consumers out of the market, expect for demand to increase and prices to rise accordingly.
In general, Canadian's don't have much sympathy for the moaning and groaning we hear Stateside. Although we have been somewhat insulated from the dramtic increase in oil (because of the strength of the $CAD), we still pay $5.32/gallon here in Montreal.
The US consumes 25% of the world's demand for oil while containing only 5% of the world's population. So, do your part by getting out of your SUVs and V8s and start using more fuel efficient vehicles. Or better yet, use mass transit. Or the best of all, walk!!!
Lest you think I'm full of hot air, I've ditched a 40 minute ride in a fuel efficient 4 cylinder (a conscious decision) in favour of 2 hours walking/mass transit. I don't like the cramped buses/subways better than anyone else, but at the end of the day, everyone benefits. And I notice my spare tire seems to have receeded somewhat!!!
Just my $0.02.
chinas adding 25,000 cars a day and their gov is subsidizing gas at 2.35 a gallon, we should boycott their friggen products til this stops. and I dont mean our gov, I mean all of us individually
Where are our resident deregulation experts? From a very simplistic point of view, the last few months must be making people think 'exactly how do consumers benefit from deregulation?' Improved customer service? Nope. More efficient, competitive market players? Nope. Cheaper prices? Well compared to 1978 yes, but at least back then you got a meal on board and your baggage check was included in the ticket price.
As discussed on the UA forum, air travel is now becoming a very undesirable form of transportation for those routes where there are train / bus options.
In general, Canadians don't have much sympathy for the moaning and groaning we hear Stateside. Although we have been somewhat insulated from the dramtic increase in oil (because of the strength of the $CAD), we still pay $5.32/gallon here in Montreal.
The US consumes 25% of the world's demand for oil while containing only 5% of the world's population. So, do your part by getting out of your SUVs and V8s and start using more fuel efficient vehicles. Or better yet, use mass transit. Or the best of all, walk!!!
Lest you think I'm full of hot air, I've ditched a 40 minute ride in a fuel efficient 4 cylinder (a conscious decision) in favour of 2 hours walking/mass transit. I don't like the cramped buses/subways better than anyone else, but at the end of the day, everyone benefits. And I notice my spare tire seems to have receeded somewhat!!!
Just my $0.02.
I am sure that others will have all kinds of good reasons why they disagree, so before they share those with you, let me say that I appreciate your comments. When not flying around the world, I also use only public transport in my home city of Seattle, which has no subway and is sometimes a conscious inconvenience.
I am AA PLAT and never check bags anyway (shudder), but it will be interesting to observe how most U.S. travelers adapt to all of the changes. None of the changes are really for the better, obviously, but complaining about them does not really alter the reality of high oil prices and a poorly-performing economy.
AA should go to a fare structure where 225 pounds (total weight passenger + luggage) is covered by the base fare. Anything over pays more. Fit passengers are subsidizing fat or obese ones. I'm sure a lot of fat or obese people will claim (or at least delude themselves into thinking) they're fit, but the scale doesn't care. AA could set up new check-in lines, where you and your luggage step on a scale, an invoice pops up for the amount due and you swipe your credit or debit card. Luckily I sit in the front half the time, so my exposure to flab on the economy armrest is reduced. Circumference at stomach might be more accurate, but the number of required check-in potbelly checkers might be counter-productive.
Weight has nothing to do with it. There are plenty of in shape people/athletes weighing over 225 with very low bodyfat.
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Very few people have mentioned another rationale for this fee: to convince travelers to check less luggage. This should save money, not just through lighter planes, but maybe even in reducing the number of baggage handlers needed.
I am not crazy about the fee -- I support un-bundled pricing, but wonder where the line between the basic product and discretionary add-ons really lies. Still, if $15 represents the approximate cost for an airline to handle and transport a piece of luggage, then perhaps the fee makes sense, since it is discretionary on the part of the consumer.
Quote:
Originally Posted by YLU FF
The US consumes 25% of the world's demand for oil while containing only 5% of the world's population.
Off-topic, but I am so tired of hearing this irrelevant fact from people who disdain, or are jealous of, the U.S. How about, the U.S. consumes 25% of the world's oil and produces about 25% of the world's output?
Where are our resident deregulation experts? From a very simplistic point of view, the last few months must be making people think 'exactly how do consumers benefit from deregulation?' Improved customer service? Nope. More efficient, competitive market players? Nope. Cheaper prices? Well compared to 1978 yes, but at least back then you got a meal on board and your baggage check was included in the ticket price.
As discussed on the UA forum, air travel is now becoming a very undesirable form of transportation for those routes where there are train / bus options.
30 years of cheaper air travel options v. today's airline economic crisis? for me, that's an easy one.
I'll take 30 years of Consumer Benefit Through Deregulation, Alex.
I don't agree with everything politicians did in 1978, but I agree with airline deregulation.
Even Air Canada has adopted many Southwest-like strategies such as only awarding frequent flier points on higher fares, requiring payment for advanced seat selection on lower fares, etc. Both airlines increased fuel surcharges last week (up to $90 RT depending on the duration of the flight).
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Funny you mention this, I was just telling my brother that Sinopec lost tons of $, because the gasoline prices are fixed in China so the government is in effect subsidizing gasoline. He asked where they get the money from, and I told him probably from all the crap we buy from them. They know cheap energy is the path to growth and we (Industrialized nations) are going to pay for it.
An airline industry analyst posted the following on another BB. I think it is relevant to what has been said here:
Quote:
It’s common to hear about the success of the Southwest business model as compared to the rest of the airline industry. There should be no argument Southwest is a well organized airline with great customer service. It’s also true without fuel hedging Southwest would be losing money no less than many other airlines. Importantly, if all airlines copied the Southwest model, there would be no way to fly a US airline across any mainland border. Southwest operates primarily from lower cost outlying airports, often with no same airport connections for International travel. A considerable portion of the more productive Southwest business model, comes from flying one type of aircraft in one class (coach) service providing minimal in-flight and connecting amenities all while avoiding the high cost of International operations.
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Quote:
Originally Posted by venk
From a practical perspective, unless those 200+ days of travel were on high-margin tickets plus not providing you the perks for that kind of travel would significantly reduce your travel (not everyone has a choice) posturing notwithstanding, then the airline could care less about your 200+ days on the road.
I don't have a choice but as you state, some do. Depending on when I get my travel orders my only option is higher margin fares. Fact of life and I deal with it as best I can while trying to budget according to client expectations. Instead of taking the 3PM flight home, I'll take the 6PM which puts me home even later in an effort to save the client some expense.
Do I always get an upgrade? I went 198 for 198 last year* - if I went standby, I generally rode in steerage but the point that I got home earlier was more important than those on this forum that scream about not getting their PDB.
Do I have a sense of entitlement? No...I prefer to sit up front but getting to where I'm going is a bit more important to me.
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๑۩۞۩๑Purple๑۩۞۩๑
This place is 98% whining and 2% substance, and yes, it is difficult to tell the difference sometimes.
Where are our resident deregulation experts? From a very simplistic point of view, the last few months must be making people think 'exactly how do consumers benefit from deregulation?' Improved customer service? Nope. More efficient, competitive market players? Nope. Cheaper prices? Well compared to 1978 yes, but at least back then you got a meal on board and your baggage check was included in the ticket price..
As someone whose preferred carrier is Southwest, your argument makes no sense to me.
If you look at the legacy carriers only your argument makes sense, the fly in the ointment is that Southwest continues to prove it's not the market that's broken, but the legacy carriers themselves.
Where are our resident deregulation experts? From a very simplistic point of view, the last few months must be making people think 'exactly how do consumers benefit from deregulation?' Improved customer service? Nope. More efficient, competitive market players? Nope. Cheaper prices? Well compared to 1978 yes, but at least back then you got a meal on board and your baggage check was included in the ticket price.
As discussed on the UA forum, air travel is now becoming a very undesirable form of transportation for those routes where there are train / bus options.
Returning to a regulated environment is definitely not the answer on this one. Even though we're all a bunch of travel geeks here who love the perks, the vast majority of the traveling public is only interested in getting from point A to point B at the cheapest possible price. They'll take a $150 return on a trans-con even if it means paying for food on board, an extra bag or two, and surly customer service. Sad? You betcha. Reality? Unfortunately, it's a race to the bottom and most of us are active participants.
Also, I believe there are more competitive market players these days (WN, for example). The overwhelming majority of the 'efficient' players of 1978 are gone (TWA, Pan Am, Eastern, Braniff, etc.).
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Posts: 312
Quote:
Originally Posted by YLU FF
I find it interesting to read these threads as someone living north of the border. A couple of thoughts I'll add to the discussion.
First, to Canadians, air fare in the US are ridiculously cheap. With oil at $130 a barrel, something has to give. Fares have to rise, services have to be cut and non-profitable routes dropped. It's a matter of survival and those who adapt the quickest win.
I think here in Canada, the two primary air carriers have known this for quite some time and have adapted their business strategy accordingly. Even Air Canada has adopted many Southwest-like strategies such as only awarding frequent flier points on higher fares, requiring payment for advanced seat selection on lower fares, etc. Both airlines increased fuel surcharges last week (up to $90 RT depending on the duration of the flight). Nobody likes it but it's the reality of the environment and both carriers are in much better shape financially than most US legacy carriers.
Secondly, high oil prices are here to stay. Although US demand is down, that is being offset by increasing demand in emerging economies like China and India. With a burgeoning middle class and strong economies, there are tens, if not hundreds of millions of consumers looking at purchasing vehicles. Unless the price of oil pushes these consumers out of the market, expect for demand to increase and prices to rise accordingly.
In general, Canadian's don't have much sympathy for the moaning and groaning we hear Stateside. Although we have been somewhat insulated from the dramtic increase in oil (because of the strength of the $CAD), we still pay $5.32/gallon here in Montreal.
The US consumes 25% of the world's demand for oil while containing only 5% of the world's population. So, do your part by getting out of your SUVs and V8s and start using more fuel efficient vehicles. Or better yet, use mass transit. Or the best of all, walk!!!
Lest you think I'm full of hot air, I've ditched a 40 minute ride in a fuel efficient 4 cylinder (a conscious decision) in favour of 2 hours walking/mass transit. I don't like the cramped buses/subways better than anyone else, but at the end of the day, everyone benefits. And I notice my spare tire seems to have receeded somewhat!!!
Just my $0.02.
People tend to overlook, including some running for president, that while the US is only 4-5% of the worlds population the US is more than 25% of the worlds economy. So energy use is on par with economic output.
A considerable portion of the more productive Southwest business model, comes from flying one type of aircraft in one class (coach) service providing minimal in-flight and connecting amenities all while avoiding the high cost of International operations.
So, how do the "full service" carriers justify cutting their domestic capacity while increasing their international capacity.?
All the big US carriers have publicly stated that their international operations bring in the money and are less price sensitive than domestic operations.
