Fly Damnit

Fuel Price Crisis

As we all know, the crude oil price now are at the record high. The oil price are still increasing as you are reading this article. Today its more then twice the price it was a year ago. Malaysian car drivers aren’t really affected by this because the fuel are still being subsidized by the government. Above is the latest fuel price updated hourly by oil-pirce.net. How does this affect the aviation industry? Does it even affect us?

The answer is YES.

Aviation fuel is generally 15-30% more expansive then the crude oil prices. Most airlines around the world are affected by this. According to IATA (International Air Transport Association) from
http://www.iata.org/whatwedo/economics/fuel_monitor/price_development.htm
the price of aviation fuel is 163.9USD/barrel.

April 10: HONG KONG - Oasis Hong Kong Airlines, a long-distance budget carrier that tried to offer premium service and spacious seats at low prices, suddenly went into liquidation Wednesday and canceled all flights, the fourth budget carrier to halt operations in the past week and a half.

April 11: NEW YORK - Frontier Airlines, the latest airline to file for bankruptcy, was pushed over the brink by a problem that could spread to other carriers: credit card troubles.

Aprill 11: ATA Airlines, Skybus Airlines and Aloha Airlines all have filed for bankruptcy in recent weeks.

Aviation fuel price per barrel conpared to crude oil price

Some terms from wikipedia:

Aviation fuel is a specialized type of petroleum-based fuel used to power aircraft. It is generally of a higher quality than fuels used in less critical applications such as heating or road transport, and often contains additives to reduce the risk of icing or explosion due to high temperatures, amongst other properties.

Most aviation fuels available for aircraft are kinds of petroleum spirit used in engines with spark plugs i.e. piston engines and Wankel rotaries or fuel for jet turbine engines which is also used in diesel aircraft engines. Alcohol, alcohol mixtures and other alternative fuels may be used experimentally but are not generally available.

Avgas is sold in much lower volumes, but to many more individual aircraft, whereas Jet fuel is sold in high volumes to large aircraft operated typically by airlines, military and large corporate aircraft.

Jet fuel is a clear to straw colored fuel, based on either an unleaded paraffin oil (Jet A-1), or a naphtha-kerosene blend (Jet B). It is similar to diesel fuel, and can be used in either compression ignition engines or turbine engines.

Possible solutions?

1. Revise ticket price:
American airlines revised their ticket price and charge their passenger extra for weight, luggage etc. Travelers pay from $10 to $60 more for round-trip domestic tickets on United Airlines, Delta Air Lines and American Airlines, the higher charge applying to trips of more than 1,500 miles and the lower charge for trips less than 800 miles.

2. Revise flight plan, taxi fuel and flying techniques:
This is what MAS is trying to do, revising the taxi fuel, better flight plan, and changing alternate. Some airlines in Europe are trying new shorter airways to cut the fuel cost.

3. Create awareness:
MAS has this Fuel Conservation Briefing to create awareness.

4. Taxi with 1 engine?
Coming up on flydamnit’s next post !

Some Quotes:
“Frankly, we do not believe that the US airline industry can withstand $100+/barrel oil prices without major structural change,” analysts at Merrill Lynch Airline Research said.

“Unless fuel prices rapidly retreat, it stands to reason that additional carrier bankruptcies cannot be ruled out,” - JP Morgan Securities report.

Fuel costs are the biggest catalyst in the latest flurry of consolidations in the US airlines industry, analysts say, and may bring about more trouble as with the exception of a few, none of the airlines has prepared for today’s cost environment. - platts.com