The miracle budget airline that is Ryanair continues to buck the trend of low cost carriers across the world by actually decreasing prices, with a promise to cut fares by five percent--and with a huge sale on now with five million seats going for €10 (including taxes and charges) for September and October travel.
Anyone would think that Ryanair had a mystery supply of cheap fuel, but no, CEO Michael O'Leary has admitted he's messed up on the oil price front already; that's why Ryanair will probably only just break even this year. Even so, he's sticking with the price decrease promise anyway.
The other big drama for Ryanair these days is the crackdown on "scraper" websites that have been selling the carrier's flights. Any customer who buys one of these fares (which, ironically, often end up more expensive anyway) will have their booking canceled, so there's definitely no benefit in going to third-party sites. We're keen on picking up a few €10 fares ourselves, but we'll book direct. Promise.
We settled into our seat on a Delta flight on Saturday and took a look at the offerings in the seatback pocket in front of us. Skymall catalog, check. Safety card, check. Wait, what's this one-page thing signed by a bunch of airline CEOs?
Oh, it's a laminated copy of the whiny open letter they circulated in July, asking us to write to Congress on their behalf to get those dastardly "speculators" out of the commodities markets. How splendidly tacky!
US Senator and majority leader Harry Reid (D-NV) unveiled what he's calling an anti-oil speculation bill on Wednesday, winning applause from the airline industry and even some scant praise from Republican senators. Reid's bill, which he hopes to put to a vote before Congress' August recess, would limit the number of oil futures an investor could hold as well as demand greater transparency from foreign markets and US traders who do business abroad.
Reid admits his legislation won't completely end speculative investing--isn't all investing speculative?--but his idea is to distinguish between investors actually in the market for oil to burn (like airlines) and those in the market for profits, with no intention of actually taking delivery (like hedge funds and investment banks).
While Republicans are also eager to score some points on the oil price issue this election season, they may have a chance to kill Reid's pro-regulation bill by tacking on drilling provisions. House minority leader John Boehner (R-OH) says just stopping speculation isn't enough:
It's just another excuse not to drill. Without speculators, you have no liquidity in these markets.
Both British Airways and Ryanair will cut capacity this winter, joining the ranks of American carriers that have already announced cutbacks because of the escalating cost of fuel. BA chairman Martin Broughton said today that his airline would be making bank if oil still cost $85 a barrel, a price last seen in February. But instead of bragging about handsome profits, he declared that he and his colleagues are in the midst of
Perhaps the biggest crisis the aviation industry has ever known.
Virgin honcho Richard Branson declared yesterday that the industry is in a "perfect storm" thanks to high fuel prices and a softening economy. But for its part Virgin America isn't too worried--despite what you may be hearing.
Says spokeswoman Abby Lunardini:
We have no idea where the "rumors" are coming in from, but it is safe to say they are not true.
Abby also reminded us that VA's brand new fleet uses less fuel than the planes at an average airline. Good news for sure: Oil's selling for $145 a barrel!
Serial airline entrepreneur Richard Branson channeled a bit of Teri Hatcher's "Seinfeld" character in a recent interview, telling the UK Times that he expects "spectacular casualties" in the industry over the next 12 months.
The mogul went on:
You have the perfect storm--you've not only got the banking crisis and the housing crisis, you've got the soaring fuel prices as well. One of the big American carriers will almost definitely go.
Here's hoping his predictions don't indicate his thinking on the Virgin-branded carrier in the US, about which rumors have recently swirled.
One of the most interesting--and underreported--aspects of Chuck Thompson's book "Smile When You're Lying" was his discussion of Peak Oil and its potential effect on the travel industry. And whether or not you believe the theory that we will soon tap the world's petroleum reserves and begin a long, disastrous decline into a carbon-free future, you can't deny that the price of oil has dramatically increased over the past year.
It now costs about $100 to buy a barrel of oil, and that has some airline analysts predicting that fuel surcharges might turn into fuel charges. Think of it this way: Instead of buying a flight, you're in effect renting the airplane seat. The fuel you need to get to your destination would be extra, just like when you rent a car.
Of course, airlines already hedge against price increases, buying up mass quantities of jet fuel at discount. Southwest, for example, is only paying about $50 a barrel for most of its gas. Continental does the same, but only gets a third of its fuel below market rate. United does it differently, adding flat surcharges on tickets to compensate for higher costs.
By removing the fuel charge from ticket prices, airlines would avoid the hassles of betting on petroleum futures. Of course, that'd make shopping for airfares much more difficult and put passengers--rather than airlines--at the mercy of the global energy market.
Mark Ashley at Upgrade: Travel Better doesn't like the sound of that:
This would be awful for consumers, whose ability to predict the actual cost of travel would be flushed down the toilet...The fuel bill on a 7,000-mile trip can change substantially with small shifts in the price of oil. "Low fares" would be a thing of the past, unless the airlines started "free fuel" promotions...
I wouldn't be surprised to see Skybus or Spirit try something like this, since they're already nickel-and-diming their customers and they're known for doing anything to make a buck.
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by amandak
