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End of the line for gas-guzzlers
01 April 2006
With high fuel prices continuing to damage airline profitability, the aircraft manufacturers are suggesting that the case for buying new aircraft is increasingly compelling. Geoff Hearn investigates their claims.
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Airlines
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If it were not for high fuel prices, many airlines might be returning their best financial results for decades. Figures from the International Air Transport Association (Iata) suggest that airlines enjoyed record levels of revenues and passenger growth in 2004, which was sustained in 2005.
Airlines have not squandered this economic revival. Iata says its members reduced their non-fuel costs by 3% in 2005 in addition to the 4.5% reduction achieved in 2004. Because of the high cost of fuel, airline managers are desperately seeking further savings to minimize the economic damage.
With passenger numbers growing and fuel efficiency at a premium, older aircraft are losing value and the manufacturers are pushing the benefits of their latest models.
Clearly with fuel costing close to $2 per gallon, the balance between cash and capital costs looks very different than it did in the halcyon days of 75 cents per gallon....
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