AltEnToday

I recently caught an article from Yahoo News titled, Fewer, pricier flights and job cuts, and was stunned at the depth of impact that the $100+/barrel oil price is having on airlines. From what I understand (and this is 3rd hand knowledge) most airlines put jet fuel as their single largest expense - in some instances up to 70 percent of their costs. According to the article - at $139 / barrel - and aiming towards $150 - $200, some companies just simply cannot maintain their fleet or fly low-capacity routes.

In James Howard Kunstler’s book The Long Emergency, he points out that airlines are perhaps the most susceptible to price shocks in the oil industry. Their variable costs are so closely tied to the price of oil that this news of canceled flights is unsurprising, especially in light of the overall economic market condition.

Airline travel, in my mind, can suffer a horrendous collapse overall if we’re not careful. Just this evening I checked flights to travel to the East Coast and was astounded at the prices - I’ve never seen such high fares and limited inventory throughout nearly all of summer. It wasn’t just one airline or one airport - but overall prices were very high and according to Kayak.com’s price management tools, there really aren’t any great buys out there. But the question is - if the airlines cut back, what happens if people simply choose not to travel? Then their planes get empty; and more flights get canceled.

Yes, by all accounts it appears we’re in a speculative energy bubble that is a victim of the declining value of the dollar in the light of a foreign war and a domestic financial crisis. But if airlines cannot stay cost competitive - what might happen to the future of travel? If I wanted to drive to the East Coast (ballpark 3,000 miles) in an average sedan (ballpark miles per gallon 24 mpg) paying an average gas price (say, $3.75 being very modest), that’d run a whopping $470, not accounting for hotels and food along the way (or insurance, maintenance, and depreciation). Suddenly an $800 airfare doesn’t seem so outrageous.