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155 comments on The Future of Air Travel?
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155 comments on The Future of Air Travel?
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Say, what about oil from French fries, and maybe we can capture bovine gases and reduce global warming at the same time? :)
Well done Cameron,
This is a very informative post and the data for the graphics must have taken some effort to assemble. Thanks so much.
Airlines provide a transport service which has several distinguishing features:
- Speed. The time-saving for lengthy journeys is considerable compared to all other alternatives.
- Range. Having out-competed long-distance passenger shipping, air travel now moves the vast bulk of long-distance passengers.
- Flexibliity. Airliners can fly wherever there is demand. They can establish new routes and capacity very quickly compared to road/rail. They can hop over unpleasant or dangerous regions altogether. Airliners can still make money on "thin" routes - one plane a week, carrying a few dozen passengers, etc. Services can also be reduced rapidly and the airliners moved elsewhere without tears, compared to say rail.
So for these reasons there'll always be *some* demand for airlines - unless society collapes completely. (Back in the 1930s the cost of a flight from Australia to Britain was the equivalent of around 10 times the 2008 Economy Class fare, but government mandarins, business leaders and the rich valued their time enough to make it worthwhile.)
Up until now, cheap jet fuel has allowed an exponential expansion in mass tourism and has also enabled easy business travel/commuting, family visitation, overseas education and migration, etc. While there appears to be no future for a large proportion of this demand once fuel costs increase sufficiently (and telecommuting, SKYPE etc. are waiting in the wings as serious competitors), remember that airlines can respond to this demand reduction by quickly reducing their capacity. (Sacking workers, scrapping planes; it's harsh but effective.)
So airlines as an industry will survive unless they take their eye off their revenues and costs. They'll be leaner, probably with more emphasis on efficiency, less choice of schedules and a lot of company mergers, but while liquid fuels are still being produced, there'll still be at least some air transport.
On the other hand, the latest Super-jumbo aircraft such as the Airbus A380 may ironically become extinct despite their low fuel consumption per passenger. They may prove too big for the thinning demand for air travel as fuel prices increase.
You're the first comment to mention videoconferencing. I know with humans being a social animal, nothing will ever replace a personal visit, but videoconferencing and distance learning will have to pick up the slack as air travel becomes less and less affordable.
Irony : my company (a big European IT service company) just won a contract to manage videoconferencing for ... Air France!
Shhh! Don't tell the clients. Might give them ideas.
I really don't understand your reasoning here. On the intercontinental hub routes (e.g. London<>Bangkok) the A380 will rule. OK, the seat price may have to rise to all-business class fare levels and above and they will be packed in like sardines and only fly once a month but the very efficiency of the beast will ensure it is the cheapest option for these routes...
Nick.
I'm not a finance person, but given the huge capital costs of that beast, who could afford to fly it once a week? Just imagine the interest payments on a $330M plane. Maybe if it were sold at a steep discount in a bankruptcy auction.
I predict a total collapse of domestic flights on all continents, since these could be replaced by high speed electric rail - journeys would take longer, but should cost considerably less (why is Amtrak the international exception), also trains should be much more comfortable than cramped airline seats.
With regard to inter-continental flights; the number of carriers is likely to fall to just one per nation, with some countries not bothering if a boat to the nearest continent is practicable.
I agree that a jet like the A380 needs to spend 99% of its time in the air, and that, for example, one flight a month between London and New York is not going to be sustainable. However, one flight a month (or week, or whatever interval) for the route does not also mean only one flight a month for the jet.
I am much more interested in the relationship between the price of oil and the level of personal disposable income. As the price of oil rises, one would expect a fall in the number of passengers able/willing to buy tickets.
Also, what is the split between ticket revenue that is business and non-business. Is it reasonable to assume that businesses will be tightening their belts just as much as individuals?
At what price point do people start, en masse, to abandon SUV's and privately owned light aircraft. I read yesterday that some SUV's have depreciated more than 25% in the first quarter of this year, and in some cases the depreciation has been more than is expected in an entire year. Is the same true of light aircraft and small speedboats?
There is a dividing point between the truly wealthy and the rest of us. My guess is that the majority of people that can afford a light aircraft or luxury boat, are not that worried about the price of gas, and will only vacation 4 times a year instead of 6. Unless there is a real depression and their source of revenue bites the dust.
This is a time-honored way of taking debt off the books. The companies that put the satellites for satellite phones up went bankrupt; the companies that took over were relieved of the debt and thus had a lower cost structure. I haven't checked on this story in a while but the replacement companies were better set up to make a profitable business of it than the original company.
Giddaye Nick,
Surely (and I keep going back to this) the people that begged, borrowed and stole to get these things into production are not idiots. Surely someone along the line must have placed PO (or at the very least made some effort to estimate fuel prices in 20008 and beyond) in the "against" box.
It's so difficult for someone like myself to believe that the investors loaning out the trillions are that naive.
Regards, Matt B
Oh, believe it, Joe Average. Perhaps not so much naive as incredulous that oil could ever get really scarce. You don't believe they could be ignorant and they don't believe that no-one will fix this.
I don't think many businesses plan for contraction; most look for ways to grow. maybe an A380 represents a way to get costs down, if they can fill them. Now they have to figure out how to fill them. Frequently.
Just heard the President's comment to urgently grab two and a half years crude supply (for the US) in sensitive coastal areas - if ten years to actually get it out can be called "urgent". Two and half years worth... Then what?
Here's an everyday question for Todsters that sums up my predicament as a fence-sitter; just a Yes/No answer will suffice... My 13yo daughter needs braces, cost (AU)$3000 out-of-pocket - checked around, compares to other quotes. Though any problem is barely noticeable, Doc says it will be "better in the long run" (of course, the "Long Run" is why I visit here!). So, go ahead with the non-critical op or risk the wife divorcing me? (Kidding, but there'd be friction!)
Thanks in advance, Matt B
I wore braces; lots of stigma associated with 'em. Didn't have much choice either. Did what I could to get 'em off as fast as I could--2 years+2 years retainer. Created later enamel and cavity trouble costing more than braces. My advice is to leave the choice to your daughter, provided the money's not an issue.
What other things might she need with the $3000 given the economy we're heading into? On the other hand, we're vain creatures and I'm glad my parents got me braces way back when.
It depends on how bad her teeth are, braces might not be "just vanity" but a medical necessity. She shouldn't have (for example) physical discomfort while eating, or be unable to clean her teeth properly so she loses them to gum disease, etc.
I'd go ahead and do it. The only reason not to is that you think the caca will hit the fan sometime soon. But if the caca hits the fan then we'd have hyperinflation and bank failures and you wouldn't have the three grand spare anyway! Use it or lose it :)
Thanks, not that I had any say to start with (never ask sisters, sister-in-laws, school mums - in fact any woman! - for their opinion on such matters). Guess we'll just have to be another three grand behind the eight ball if current trends continue.
Further, never ever seek a second opinion and let your wife find out about it!!!
Ahh, to be out of debt...
Regards, Matt B
Still crossing fingers and toes, coz there's two other kids with teeth in this family.