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The World's Airlines - Boom or Bust

 article about The Worlds Airlines - Boom or Bust
2008-07-26 21:22:05

First of all we might determine the reasons behind the rises in fuel prices.
The two main reasons for rising are demand and greed.
In terms of demand it should be noted that developing countries, and mainly
India and China, have an increasing demand for oil in order to fuel their booming economies.

The first aspect is that of supply. Main oil suppliers are countries such as
Saudi Arabia, the United Arab Emirates, Iran as well as Iraq and Kuwait. Despite claims that there is plenty of oil still to be had from the Middle East region, the analysis put up by such countries as to actual figures in relation to production capacity and reserves has a tendency to be optimistic and often seriously flawed. The fact is that most Middle East oil suppliers are running at near or full capacity and known reserves are certainly not as much as quoted. Non-Middle East oil-suppliers include countries such as Venezuela, Nigeria and Russia all of which have either supply or political difficulties and/or both.
The second factor is blatant greed and there can be no other description for it.

Greedy oil speculators, consisting mainly of people who have yet to find themselves a real job and who don't have the capacity to find and keep any productive employment, have made billions by simply speculating the price of oil through means that can only be described as highly suspect.
The end-result may well be that this collection of grubby no-hopers who could not get a job anywhere else, may well drive the various economies into various stages of recession.
In terms of oil prices, Opec has a lot to answer for. Opec keeps the oil price artificially high through supply/demand manipulation in order to feed oil revenues into their countries and in most cases into the pockets of a greedy few.
The factors as to the health of the airline industry are many.
There is the price of oil.

Jet aircraft don't fly too well on banana-skins. Many major airlines have 'hedged' their fuel costs meaning that they will receive their fuel at a predetermined price. These operators often don't like to mention the 'hedged' fuel costs as the excuse of hiking up fares in the name of fuel costs is then exposed. In terms of fuel-related costs, airlines should by now also have received new and more fuel-efficient aircraft. The new aircraft have mostly yet to eventuate, the problem being that while Boeing and Airbus both have massive order backlogs for fuel-efficient aircraft such as the A380, 787 and the A350, these aircraft producers have simply not delivered on their production promises. The result has been that most of these new pieces of equipment may not be delivered for some time yet thus placing airlines at a disadvantage. The two main aircraft manufacturers simply totally failed to deliver what they promised.
Then we have the issue of competent management.

With most airlines being in private hands, issues of shareholder interests and customer interests represent a finely defined balancing act. Neither can, or will, survive without the other.
Problems arise when airline managers begin to concentrate on share-prices and profit instead of concentrating on customer satisfaction, proper maintenance and safety standards as well value for money services.

Examples are beginning to highlight themselves of airlines that are sacrificing their good name in order to just keep their profit results to the satisfaction of the stock market with the result that some airlines are beginning to flounder in terms of their reputation.

I shall give two examples and readers can draw their own conclusions.
Emirates is a comparatively new major operator. The airline is well-managed, it has good, well maintained aircraft, good staff and the overall driving focus is on the passenger rather than the shareholder. The airline is doing remarkably well and there have been very few incidents with the airline.
Qantas, on the other hand, is one of the world's oldest airline. It once had a great name in the airline industry. These days people can't run away from the airline quick enough. In the past few years, Qantas has made huge profits. Also in the past few years, there has been one problem after another with Qantas aircraft, maintenance engineers, staff redundancies and a host of other difficulties. As to just mention a few of the most recent problems, I will highlight some of the most recent Qantas incidents.

One 747 failed to take-off at LA, one 747 overshot a runway, one 747 lost total power at Bangkok, one aircraft had to return to Perth after an engine failure and the latest incident was whereby part of a 747 fuselage was ripped open along the rivet line at 27,000 feet necessitating an emergency landing at Manila with suggestions being made that the same aircraft reportedly had 'corrosion' problems. And these were only a few examples of Qantas incidents. Only the aircraft crews, not Qantas management, saved the day in all of these cases and the repeated problems with Qantas aircraft suggest a regime of cost-cutting and overall mismanagement. Clearly Qantas, and its management especially, needs to dramatically lift its game in terms of its customers, reliability, maintenance and safety focus.
I certainly know which of the two airlines I would fly with from Australia to Europe and/or to and from other destinations and it certainly would not be Qantas until and unless there are major culture changes within the airline and its management.
As a consequence of oil prices, a
US recession and some cases of incompetent management, a number of US airlines have recently 'fallen-over' and the prediction is that there will be many more casualties. In the US, there will be various mergers, Delta and Northwest being the most recent example in progress and some of the cut-rate, and cut-throat, airlines may well disappear.
Europe, there will no doubt be more mergers among the major airlines while smaller, cut-price, will come and go with great regularity while in the Asian and African regions, some airlines should not even be allowed to fly.
In overall terms the airline industry is not in good shape. While we have some good airlines and managers, we have aircraft manufacturers who can't deliver, airlines that cut corners in order to boost profits and air regulators who barely know what and when to regulate.
After all that. Happy flying people.



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