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Aviation: outlook is grim at best

by Elco B Tue Jun 3rd, 2008 at 05:32:04 AM EST

I stole the titel from a press release from IATA.

Seeing the graph they are in full panic-mode now.

IATA is in conference in Istanbul (1 - 3 June IATA Annual General Meeting and World Air Transport Summit) and what is coming out there is worth a look.      

About Us
IATA is an international trade body, created some 60 years ago by a group of airlines. Today, IATA represents some 230 airlines comprising 94% of scheduled international air traffic. The organisation also represents, leads and serves the airline industry in general.
               


Just before the opening of the conference, IATA gave his usual monthly press release about air-transport figures.

Some points:    Traffic Conitues to Slow

29 May 2008 - Istanbul
"The impact of skyrocketing oil prices and weaker economies has made its way to traffic growth. At this time last year we were talking about 6.7% growth for the first four months of the year. This year it's 4%. There has been a step change downwards," said Bisignani.

...

"In 2007 airlines posted a profit of US$5.6 billion. This was the first profit after six years in which losses totaled more than US$40 billion.

And indeed, this was just an introduction for what is coming.

After the first day of the conference we have already this:

Industry Leaders Agree to Historic Declaration

The leaders of the world's airlines unanimously agreed to a resolution calling for governments, airports and labour to take immediate action to help the industry survive the growing financial crisis. The resolution was made at the International Air Transport Association's (IATA) 64th Annual General Meeting and World Air Transport Summit.

Ah, government is needed!

Some other points from their 'historical' declaration:

Governments must eliminate archaic rules that prevent airlines from restructuring across borders.
     
Sounds good, but what they mean? Government is archaic?  

In view of existing fees and charges, governments must refrain from imposing multiple and additional punitive taxes and other measures that will only deepen the crisis.              
     
Taxes are punitive?  Oh well, they forget all the tax-money invested in the infrastructure and e.g. ATC(air-traffic-control).

State service providers must invest to modernise air transport infrastructure urgently, eliminating wasteful fuel consumption and emissions.
Ooh, government doesn't pay enough! Not our fault we are wasteful.

Business partners, in particular monopoly service providers, must become as efficient as airlines are now.  If not, regulators must restrain their appetite with tougher regulation.              
Oewaw; regulation no good?

Labour unions must refrain from making irresponsible claims and join the effort to secure jobs in aviation and indeed in other industries.              
     
Yep, the usual mantra; Unions are irresponsible, evil, evil....  

In the interest of the global economy and the flying public, we urge authorities to enforce the integrity of markets so that the cost of energy reflects its true value.              
     
Waw, and now government and regulation is needed again?  

And final:

"The airline industry is sending a clear message to governments, partners and labour. We are in crisis. Governments, labour and our business partners must understand this. And they must act," said Giovanni Bisignani, IATA Director General and CEO.              

I fully agree, we are in crisis.
But their 6 point plan is confusing me. It looks like they want someone else pays the bills so they can keep the profits.

And there is another press release from IATA,  02 June 2008.
Crisis Again - Deep Losses Projected

The International Air Transport Association (IATA) revised its industry financial forecast for 2008 significantly downwards to a loss of US$2.3 billion. The forecast uses a consensus oil price of US$106.5 per barrel crude (Brent). This is a swing of US$6.8 billion from the previously forecasted  industry profit of US$4.5 billion that was announced in March and based on an average oil price of US$86 per barrel (Brent).

We gonna loose lots of money.....HELP !

From that release:

"We also need to take a reality check. Despite the consensus of experts on the oil price, today's oil prices make the US$2.3 billion loss look optimistic. For every dollar that the oil price increases, we add US$1.6 billion to costs. If we see US$135 oil for the rest of the year, losses could be US$6.1 billion," said Bisignani.

"The situation has changed dramatically in recent weeks. Oil skyrocketing above US$130 per barrel has brought us into uncharted territory. Add in the weakening global economy and this is yet another perfect storm," said Bisignani.

"Oil is changing everything. There are no easy answers. In the last six years, airlines improved fuel efficiency by 19% and reduced non-fuel unit costs by 18%. There is no fat left. To survive this crisis, even more massive changes will be needed quickly. Air transport is a catalyst for US$3.5 trillion in business and 32 million jobs. This is an extraordinary crisis with the potential to re-shape the industry with impacts throughout the global economy. Governments, industry partners and labour must deliver change," said Bisignani.              


OHO, we are switching to full panic-mode...Everybody must hulp us!

And there is another press-release from IATA 02 June 2008:Fuel Crisis a Catalyst for Change

Agenda for Freedom.

The greatest call for change was with governments. "Re-regulation or re-nationalisation is not the right answer. But it may be the only one unless we change the rules of the game. The Chicago Convention is not the problem. It's the bilateral system that was designed for another age. The Freedoms of the Air are only restrictions on our business. Airlines cannot look beyond national borders to manage risk, access global capital or consolidate. To fight crises effectively, brands not flags must define our business," said Bisignani.

 "We must communicate clearly to governments the dimension of the oil crisis, the potential impact on the global economy if the air transport industry fails, the measures that airlines are taking to survive and the action we need from them. To achieve this, IATA is organising an Agenda for Freedom Summit in Istanbul in the fourth quarter of this year. The invitation is open to any country with the courage to change. Already 12 countries have agreed to participate," said Bisignani.

Sorry, by now my head is exploding....over to your more intelligent comments...

Display:
CEOs on crack? This reads like a mash-up of MBA cliches with no substantive content.

What does he want, exactly?

It's like meta-Sarkozy - there's a lot of self-importance, drama and grand-standing, but I'm not seeing any specific suggestions to deal with anything much.

Bisignani

The forecast uses a consensus oil price of US$106.5 per barrel crude (Brent). This is a swing of US$6.8 billion from the previously forecasted  industry profit of US$4.5 billion that was announced in March and based on an average oil price of US$86 per barrel (Brent).

vs

Bisignani

For every dollar that the oil price increases, we add US$1.6 billion to costs. If we see US$135 oil for the rest of the year, losses could be US$6.1 billion,"

According to that last sentence costs should increase by more than $45 billion over the original estimate at $106.5/bl. But the new loss is $6 billion?

Is it too much to expect a CEO to produce numbers which add up without moving decimal points around for PR reasons?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jun 3rd, 2008 at 07:16:09 AM EST
32 million employees?

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Tue Jun 3rd, 2008 at 02:01:36 PM EST
[ Parent ]
Quote from diary "air transport is a catalyst for....32 million jobs"

I'd guess 5 million staff globally in aircraft design, manufacturing, flight operations, sky control, airports, airfreight logistics etc. The other 27 mill must be those dependent on air travel to do their job.

You can't be me, I'm taken

by Sven Triloqvist on Tue Jun 3rd, 2008 at 02:12:55 PM EST
[ Parent ]
one is the gross increase in costs, the other the net losses. The difference between the two is the amount by which they can expect to push prices up.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Jun 3rd, 2008 at 03:00:04 PM EST
[ Parent ]
But, would they be honest, they would state the latter.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Jun 3rd, 2008 at 03:04:10 PM EST
[ Parent ]
Ah, a diary about aviation without a picture?

Here is a picture of one of the A-380 testplanes taken in Toulouse last weekend. It flew to Paris to be loaded with relief-material for Myanmar.



The struggle of man against tyranny is the struggle of memory against forgetting.(Kundera)

by Elco B (elcob at scarlet dot be) on Tue Jun 3rd, 2008 at 07:19:10 AM EST
Looking at what's written on the fuselage:

I don't know if it's greener, cleaner, or smarter, but it ain't quieter. Most Toulouse A380 test flights have gone over my head at various altitudes. There's a very specific hollow bass boom sound to the A380. (Though this comment doesn't deal with take-off and landing, when noise is greatest).

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jun 3rd, 2008 at 09:53:55 AM EST
[ Parent ]
Excellent diary!

Where is the pyramid building industry today?
Where is the horse transport industry today?
Where are the tea or wheat schooners, the traction engines, the telex, the fax machines, the fixed line phones?

We will adapt to life without commercial flight. 32 million workers will need retraining. 80% of them can quickly move into service jobs in the expansion of other travel modes such as sea or rail. The 20% specialized staff - pilots, designers, mechanics etc will find it harder - pilots most of all.

You can't be me, I'm taken

by Sven Triloqvist on Tue Jun 3rd, 2008 at 08:13:00 AM EST

Where is the pyramid building industry today?

Being reinvented as cob and straw bale. doesn't need concrete or cement which are gonna be flat bust soon as well


Where is the horse transport industry today?

On the comeback within 20 years. I guarantee it.

Where are the tea or wheat schooners,

I've been wondering if these will comeback in some form for low cost freight in some parts of the world. I think there will be other ways of greenly powering ships, but sail is always free.

the traction engines
...is just a steam powered tractor. the enxt generation will be lectric, but I wonder if there will be a return to static engines.

the telex, the fax machines, the fixed line phones?

don't you have fixed lines in finland anymore ?

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Tue Jun 3rd, 2008 at 08:48:20 AM EST
[ Parent ]
Precisely ;-)

I have a fixed line because my accountant hasn't progressed beyond the fax. I hardly use it otherwise, but it came with the broadband deal.

Even Finnish grannies are switching to 'mummo-phones' - they look like the old fixed phones with big keys and a pick up handset, but they have gsm inside and no wires.

When WiMax arrives we can recover an enormous amount of valuable copper.

You can't be me, I'm taken

by Sven Triloqvist on Tue Jun 3rd, 2008 at 08:58:24 AM EST
[ Parent ]
Then rid me of a misapprehension: Wimax is a two-way system, ie the user has a receiver/emitter? (I thought you would still need to upload by coaxial, like satellite connections).
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jun 3rd, 2008 at 09:57:04 AM EST
[ Parent ]
It is a wireless system. A base station will radiate over about 30 kms. All you'll need is the equivalent of a wireless receiver like the Bluetooth in your laptop. So it enables local non-interactive television, radio, magazines, information services etc

But interactivity directly with base does require a more powerful emitter at your end. Or this will probably be accomplished by wifi cascading - meaning that WiFi stations are connected in a flexible network back to the base station. This is an existing technology.

This can work reasonably efficiently where downloading from the base is the main data traffic, and uploading to the base is much smaller.

The current promotion of WiMax focuses on 'last mile' access. Which means there will be a node covering a few hundred houses - just as currently optical runs up to your neighbourhood and then wires or cable bring the signal into the house = the last mile.

But I don't think WiMax base stations are going to be that expensive. And, as I've said before, they enable local peer-to-peer systems that can be independent of the Internet. Thus one of their unique and unprecedented effects IMO will be the relocalization (or denationalization) of communities.

You can't be me, I'm taken

by Sven Triloqvist on Tue Jun 3rd, 2008 at 01:04:00 PM EST
[ Parent ]
iPhone offers the old-fashioned rotary dial:

Though it probably does not offer the edge touch for your fingers.

by das monde on Wed Jun 4th, 2008 at 02:55:30 AM EST
[ Parent ]
Jordanian's Majali is New IATA Chairman   03 June 2008
...Majali noted that change must also involve governments.

"In the unexplored territory of astronomical fuel prices, the environment debate takes on a completely new dimension.

The incentive for airlines to improve performance has never been bigger, but governments stand in our way.

They must overcome their obsession with punitive and unilateral emissions trading schemes and start working on real solutions to reduce CO2. A Single European Sky is critical.

Equally important is the Agenda for Freedom.
To fight the many crises that beset this industry, we must liberalise.
Airlines need the same commercial freedoms that almost all other businesses enjoy to manage risk and grow our businesses into truly global enterprises," said Majali.
...

Ah...a new chairman.
He also forgot to explain who's freedom is involved in their'Agenda for Freedom'.

The struggle of man against tyranny is the struggle of memory against forgetting.(Kundera)

by Elco B (elcob at scarlet dot be) on Tue Jun 3rd, 2008 at 08:23:04 AM EST
It looks like they want someone else pays the bills so they can keep the profits.

Just another symptom of advanced Anglo-disease.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Tue Jun 3rd, 2008 at 08:50:12 AM EST
we urge authorities to enforce the integrity of markets so that the cost of energy reflects its true value.

erm isn't it the integrity of the markets that's casing all the problems for you?

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Jun 3rd, 2008 at 01:30:16 PM EST
Yeah, and I suspect them too of not knowing what 'true value' means.

The struggle of man against tyranny is the struggle of memory against forgetting.(Kundera)
by Elco B (elcob at scarlet dot be) on Tue Jun 3rd, 2008 at 01:36:40 PM EST
[ Parent ]
To them it appears that "true value" means "just look how important we are to the global economy, we can't be responsible for the externalities of our industry." The effects of burning fossils such as health care costs, a total decrease in international stability, and the general destruction of the environment and climate must be paid by civilians, not by them.

Hope i get to fly to Hong Kong soon for a few days bizness.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Tue Jun 3rd, 2008 at 02:00:31 PM EST
[ Parent ]
When are people going to understand that 'the markets' and 'true value' is code for 'whatever the hell I want'?

It's like invoking god - 'god is on our side in the forthcoming battle.'

Which is nice. Best of luck asking god to take a bullet for you.

The difference between god and 'the markets', is that a meme for effective abuse, 'the markets' have been much more effective.

You will never, ever, find pundits saying that 'markets' should be 'liberalised' if it means swathes of poor people being able to start and run businesses on an equal footing with the playas.

Remember the Vikings? The neo-liberals are Vikings in suits. They come to pillage, rape and plunder, but instead of burning your house directly they just foreclose on it and wait for it to rot.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Jun 4th, 2008 at 10:31:45 AM EST
[ Parent ]
But their 6 point plan is confusing me. It looks like they want someone else pays the bills so they can keep the profits.

Even if you may have felt confused in the process, you clearly didn't end up confused.

They want someone else to pay the bills so they can keep the "profits" in an industry that on a full cost basis has never made a profit.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jun 3rd, 2008 at 02:18:22 PM EST
  • regulation of airlines is indeed a crazy nightmare. A lot of countries have nationality rules for airplanes flying specific routes; air traffic control is split along national borders with no overall coherence, which is indeed wasteful and dangerous;

  • there is a lot of fuel wasted taxiing around airports, as well as cruising around them - some of that is due to airlines all wanting to land and take off at the same time, but some is due to airport and air traffic procedures;

  • the need for the true cost of energy and nuisance indeed needs to be reflected (thus the need to include the sector in carbon emissions control schemes);

  • playing with labor costs is not really conducive to safety; it is true that safety could be made predominantly the responsibility of the States rather than of the airlines, but I'm not sure the airlines would be so happy about that...


In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Jun 3rd, 2008 at 02:58:53 PM EST
If I guess right, the fuel waste they think of is circling above airports, which they presume to decrease would flight routes be eliminated, and would airplanes be allowed to pollute the skies anywhere.

The true cost of energy they think of is the Marxist value of extracting oil, with no externalities accounted for; as opposed to the supply and demand defined free-market capitalist value.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Jun 3rd, 2008 at 03:03:20 PM EST
[ Parent ]
is that which includes all externalities... but you're definitely right about their interpretation of it.

Re fuel wastage - I heard that the amounts of fuel wasted taxiing around airports are unexpectedly high.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Jun 3rd, 2008 at 03:36:59 PM EST
[ Parent ]
The problem is that the landing gear has no traction and the planes use their turbines to taxi.

It can't be that costly to add an efficient motor to the landing gear so that the engines only need to be fired up once the plane is ready for takeoff at the head of the runway.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue Jun 3rd, 2008 at 03:40:39 PM EST
[ Parent ]
This idea is not new. So far, the extra weight(motor,energy-source, wiring...) added to the plane to achieve this nullifies the effort: all that weight has to be flown around wich costs extra fuel.

But for now everybody is looking for eliminating weight.
For instance: stewards have to calculate before the flight how much coffee will be needed ( number of passengers, adults, duration..) so they can load the coffee-machine with what is needed and not a liter more.

Also the constructors try to find ways to eliminate weight:
Boeing: Boeing Completes 737 Carbon Brakes Certification Testing

SEATTLE, May 02, 2008 -- Boeing [NYSE:BA] recently completed certification testing of new carbon brakes designed for the Next-Generation 737 airplane family by French supplier Messier-Bugatti.

A Next-Generation 737-900ER (Extended Range) airplane is shown performing a high-speed rejected takeoff test, designed to verify that an airplane at maximum weight with greatly worn brakes can stop safely after a refused takeoff decision. Boeing will submit the test results to the U.S. Federal Aviation Administration for certification the second quarter this year. Entry into production is expected by third quarter. Boeing will offer a retrofit program for airplanes already in service.

Through a month-long test program, Boeing reached its goal to show equivalent performance between steel and carbon brakes, and verified a weight savings of 700 pounds (320 kg) compared to high-capacity steel brakes for Next-Generation 737-700/800/900ERs, and 550 pounds (250 kg) on standard-capacity steel brakes for Next-Generation 737-600/700s. Reduced weight contributes to reductions in associated fuel burn and CO2 emissions depending on airline operations.

 

The struggle of man against tyranny is the struggle of memory against forgetting.(Kundera)

by Elco B (elcob at scarlet dot be) on Tue Jun 3rd, 2008 at 04:11:48 PM EST
[ Parent ]
I'm sure I read that Branson was planning fleets of tractors (not sure at what airports) to shift the planes from the gate to the take off holding points....

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Tue Jun 3rd, 2008 at 05:40:28 PM EST
[ Parent ]
That's a much better idea. It would be very expensive to add built-in traction, because the torque needed to move a plane is not small, and the extra fuel needed to keep the extra hardware in the air would be traded off against fuel savings.

Tractors solve all of those problems, at the cost of some extra traffic control on the ground and perhaps some extra waiting around.

Airliner tugs were standard issue at airports thirty years ago. I'm not sure why they disappeared.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jun 3rd, 2008 at 06:44:49 PM EST
[ Parent ]
They are still used to reverse planes out of parking slots.  Don't see why, perhaps with the addition of some power, they can't be used to haul a plane a couple of KM to the take off point or very close to it.  (Presumably jet engines also need to be warmed up and may have to be started some way ahead of the take-off point in any case).

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jun 4th, 2008 at 06:40:42 AM EST
[ Parent ]
I'm not so sure the discourse is Marxian. Sounds more like yet more complaints about market distortion (producers withholding supply, speculators...) not delivering the "right" price:

...enforce the integrity of markets so that the cost of energy reflects its true value...

One thing's for sure, the "true value" is less than the current price, in their view...

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jun 3rd, 2008 at 04:15:04 PM EST
[ Parent ]
The civilian aviation industry (the vulgarisation of the jet-set concept) was iirc launched by the Yanks in 1948 and later years, as a way to protect the aviation barons from having to tool down after the boom years of WWII.  (On the military side, the Soviet threat was vastly overinflated by US pols and spookmeisters to justify and subsidise the warplane industry.)  So it -- like the whole carburb build-out -- was an artificially-created industry to start with, heavily subsidised by government handouts throughout its short, hoggish life.  

Which means that no one has ever paid the true cost of their air travel -- the "nanny state" has offered it as one of the perks that are supposed to keep us worker ants loyal to the capitalist bosses.  And it has worked great.  I know more than one person whose instinctive response to carbon taxes, demand reduction, etc. is to squawk that they will give up all kinds of things, "but not air travel!  how can I go see my cousin's wedding, how can I make a weekend visit to my old Mum, how can my kids have their ski vacation in Aspen, without cheap air tickets???"  And the simple answer is "you can't / they can't."  It was only the fast-forward beanfest of supercheap fossil fuel that made the brief vulgarisation of jet travel possible, and that historical moment is over.  That was then, this is now.

Although I understand the appeal of cheap quick travel, and I feel some of the same panic at the thought of "narrowing our horizons" -- can we look around us and say honestly that the migration of bazillions of tourists and biz-jin all over the planet at lickety-split speed has, actually, created a more cosmopolitan, tolerant, culturally respectful international community?  Seems like what it has really created is the destruction of local cultures, the proliferation of cookie-cutter corporate hotels and pseudo-ritzy resorts, franchise food outlets, etc. -- not to mention contributing to climate destabilisation, pollution of air and water, noise pollution (which has far more serious health consequences than one might think), more rapid spread of epidemics, etc. -- and then too, it's just one more reason to bomb Iraq and Iran and steal the oil.  Does cheap air travel really broaden the mind, or is the "instant/convenient/ubiquitous" meme (so deeply embedded in it) far more powerful than any exposure to foreigners and foreign ways?  Hasn't it made "the rest of the world" just something else to consume, in 3day, 4day, 5day, etc. packaged tours?  I wonder.  Television was going to bring "culture and the arts" into every home and make us all educated and Enlightened and smart; and look how that turned out.  Cheap air travel was going to broaden our minds and help us to become respectful/conscious citizens of the global village, but has it?

Personally, I could care less if the aviation industry shoots self in foot and falls out of its tree.  Its time has come, writing's on the wall.  Bring back passenger rail, sez I.  OK, I have to admit the views were really nice from up there, but maybe we could still do something with dirigibles at an energy cost that would be semi-sane...

Sigh... and to think that as a kid, I loved airports...

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Tue Jun 3rd, 2008 at 10:37:10 PM EST
Indeed. At least trains still gives a sense of journeying, of actually meeting the locals along the way. Whereas with planes travelling becoms just moving along...

When do we get the Paris-Beijing HSR ?

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Wed Jun 4th, 2008 at 04:38:35 AM EST
[ Parent ]
I know more than one person whose instinctive response to carbon taxes, demand reduction, etc. is to squawk that they will give up all kinds of things, "but not air travel!  how can I go see my cousin's wedding, how can I make a weekend visit to my old Mum, how can my kids have their ski vacation in Aspen, without cheap air tickets???"  And the simple answer is "you can't / they can't."

Yes, they can. But not as a weekend trip. Maybe people will go back to taking their vacation time two weeks to one month at a time. And in the US that will force employers to take a more humane approach to vacation time, too. Too many people are afraid of taking more than one week at a time because their job might been given to someone else by the time they get back. That is the problem. Flying once a year or taking trains or boats is not the problem.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Wed Jun 4th, 2008 at 05:28:14 AM EST
[ Parent ]


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