 | Peak Oil at the Movies: Oil Crash & Crude Impact | The Oil Drum: Europe | A Primer on Reserve Growth - part 1 of 3 |  |
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eg. If the ticket price rose to twice its current level, volumes would more than halve. That in turn would push up prices even further as economies of scale work in reverse. Its not long before liabilities meant it was best to liquidate the airline than attempt to battle on. Look at the US airlines following 911.
It would be interesting to see a financial structure of an airline with fuel prices 2-3 times the current level. Can a valid business model be found and is it possible to reach there from here with the current crop of aircraft?
It might be that the coming of the post peak world is heralded by an effective severing of the transport bonds that connect the global economy - as airlines go to the wall one by one.
My take on this, is that, during the 1970's ticket prices for aiviation were at least twice (in real terms) what they are now.
The airlines were financially viable then, why not now. After all, much airline business is corporate, and they would accept a price increase as the cost of doing business overseas.
The tourist market may suffer, but I'm not convinced that the internal domestic market would suffer too much. See my other post below.
Andy
For domestic flights, which would include flights to and in the US, both business and leasure travel have median elasticity just slightly greater than 1, with leasure just slightly more elastic.
However, for international business travel elasticity is .265.
"In the short run, much of the burden of adjustment will likely be borne by decreases in consumption from discretionary decisions, since 67 percent of personal automobile travel and nearly 50 percent of airplane travel are discretionary."
Of course what that really means is interesting. What proportion of eating and drinking is discretionary? If flying is cut down by 90% does that mean we perish?
One measure is their pax-miles/gallon of fuel. Since 2001 (from memory), they have increased from 48.x pax-miles/gallon to 56.3 pax-miles/gallon. Retrofitting winglets is part of the gain. Better operations and a mix of a/c that has eliminated the 737-200 and added more 737-700s (balance 737-300 & 737-500). As Boeing's best customer thay have significant influence.
The "word" is that if new engines are ready a 737 replacement a/c based on the 787 (0nce more, but smaller) will enter service in 2012 and be 20% to 25% more fuel efficient than the 737-700.
IMHO, The number of commercial airline seats will likely decline, the amount of fuel used will decline even more, but post-Peak Oil, airline travel is such high value that it will get a higher % (much higher ?) of available fuel.
There is little doubt that the Southwest business model will "work" in a high cost environment. Reduced a/c transfers at "hubs", more point to point travel with high load factors. Slow down to save fuel is likely (add a few minutes). Perhaps turboprops.
Alan