It is Friday so it is worth taking the time here to look beyond the weekend! When you get a chance take a look at the details surrounding the launch of a Japanese car that runs on nothing but water, which now looks set to enter mass production before the end of 2014. It is most certain that this is one Japanese product that the Chinese will be looking to get their hands on fairly soon.
The significance of this news when applied to the aviation sector can be in no doubt. An affordable car that runs on one of the planet’s most abundant assets H2O – both salt and fresh water – is something that can indeed rapidly expand in Japan, China and India before gradually taking on formats with the current leading car manufacturers.
Airlines are already enjoying, in no small part, the stabalisation of oil prices due to the massive global take-up of fracking. Now, if we are to see sections of the fastest growing car markets moved out of the oil requirement equation in the near term with the possibility of this being a fast increasing trend globally, then we can hypothesise that oil prices in the long term should remain stable at least and could fall. Additionally refining capacity in the next decade will be freed to concentrate on aviation fuels. End user price reductions remain at the mercy of refining capacity so as far as airlines go it is only Delta who will see any real immediate upsides. The stagnated global economy that remains on low interest rate life support will ensure that oil prices in the short term remain relatively flat. All this is before we even get into the pricing benefits of drilling in the shallow seas of the Artic that are now free of ice for longer periods and the new technology that is allowing drilling off of the Falkland Islands and South Shetland Islands, although if anything other than gas is found here it might precipitate a war.
All in all when we consider all of the factors surrounding oil price movements over the next few years the outlook remains one where airlines can flourish so long as people stay in the mind-set of calendar Q4 2012 when people took to the air in droves.
The spectre of increasing interest rates within the next five years means that airlines must use this period to consolidate and evolve.
During 2013 Airline Economics will be searching out airlines that seem to be stagnating or going backwards and asking management what their plans are for the future, we will then be comparing their model to their nearest rivals to see if the future is bright or blighted. Some of the targets might surprise you. The eventual aim will be to produce a combined set of regional maps for AE subscribers of who is and is not winning, explain why and explore what needs to be done.
Meanwhile, the east cost of the US is bracing for the worst winter storm in history – Winter storm Nemo. FlightStats.com has reported that 2,663 flights have been cancelled today in the US. Airports with the most combined arrival and departure cancellations:
648 flights cancelled at (EWR) Newark Liberty International Airport
605 flights cancelled at (LGA) LaGuardia Airport
512 flights cancelled at (JFK) John F. Kennedy International Airport
514 flights cancelled at (BOS) Logan International Airport
229 flights cancelled at (ORD) O'Hare International Airport
122 flights cancelled at (IAD) Washington Dulles International Airport
116 flights cancelled at (PHL) Philadelphia International Airport