Oil prices would have to drop far below $70 a barrel before OEMs feel any effect on demand for commercial airliners, notwithstanding speculation that precipitous price declines could discourage airlines from committing to more efficient jets at a time when replacement demand accounts for half of all orders for new airplanes, according to Boeing analysis.
It’s true, the price of jet-A has risen steeper than a max-power climb gradient. But the cost of many other business aviation staples has remained relatively stable, and in some cases nosed over in the past five years. Even fuel prices have come down somewhat in recent weeks. These are among the findings of a comparative survey of business aviation costs and operational data compiled by NBAA Convention News.
In a curious illustration of how current events make strange bedfellows, the Air Transport Association of America (ATA) has joined Aircraft Owners and Pilots Association (AOPA) and NBAA to fight what they perceive to be causes of record-high oil prices. The two associations are members of the newly formed Stop Oil Speculation Now (S.O.S. Now) campaign, which includes airlines, trucking companies and travel associations. S.O.S.
Skyrocketing jet fuel prices did almost nothing to slow down high-flying business jet travelers, who collectively took to the skies in record numbers this year, according to industry statistics. Now that crude oil prices are falling, analysts predict economic growth will further boost the use of business jets by corporations and the well-to-do.
In the wake of Hurricane Katrina the surge in auto-fuel prices–with the per-gallon increases lagging just hours behind the rising flood waters–was at the forefront of everybody’s mind. A flurry of activity on the political front–including the release of six million barrels of crude oil from the Strategic Petroleum Reserve–further focused the nation’s attention on the cost of keeping America’s engines running.
European regional airlines don’t need to be told that fuel prices could stunt their growth. But one industry official believes that operators must start to view high fuel costs in the broader context of all expenses, and resist the temptation to blame them for all losses. Speaking at the ERA gathering, Professor Judith Patterson reminded operators of commercial aviation’s fundamental dependence on petroleum, “unlike other transport modes.”
A world without oil is a breeding ground for alarmists, some say, blithely confident that it can’t run out and “we’ll find more,” but if it ever does run out “we’ll have found something else by then.”
According to BP, rapid growth in demand for all forms of energy dominated world energy markets last year, leading to rising prices. While growth in demand from China in particular was exceptional, BP said the strength of demand growth was a global phenomenon, increasing above the 10-year trend in every region of the world.
What goes up must come down, unless of course you’re talking about the price of crude oil. Last month, oil topped $55 a barrel after an April report from Goldman Sachs warned of a possible “super spike” period during which the price of oil could surge to as much as $105 a barrel.