[strandinthewind]

Originally Posted by Stew_Matthews

As you know my background is in the oil industry but even I can see the profiteering going on.

Actually I don't see the oil price as being the issue per se, but rather the way in which airlines (except BA/Virgin) buy fuel. I once explained in a thread that organisations bid for oil and buy it in advance. That way they get a better deal and can budget effectively. BA/Virgin hold about 9 months supply at any time. The issue with American airlines is that they buy kerosine daily at market rate and they do so because at some stage they worked out that the few dollars they might lose when the sale price changes is offset by the huge cost they would have had to pay to store the fuel. Makes sense if the movement in the oil price is $10 per year. But when the change is $40 they are stuck paying premium rates and two problems occur. The first is that they can't 'lay' the costs off quickly enough - they may have booked seats for months to come. Secondly they don't have the infrastructure to store fuel purchased at a cheap price.

The short term outlook is that the only way to balance the books is to send out 'full' planes and that means reducing schedules/fights.

Playing the futures market is not always so easy. They could also lose a bundle if oil falls. But, clearly the airlines need to do more to offset the cost, to wit:

June 11, 2008

Airlines Seek Out New Ways to Save on Fuel as Costs Soar

By MICHELINE MAYNARD

The nation’s airlines are scrutinizing every step of their operations, from the tarmac to the sky, and from the nose to the tail of their planes, searching for new ways to cut their soaring fuel bills.

They are power-washing jet engines more often to get rid of grime, carrying less water for the bathroom faucets and toilets, and replacing passenger seats with lighter models.

The financial pain of higher fuel prices is particularly acute for airlines because it is their single biggest expense. Eight years ago, 15 percent of the price of an airplane ticket went to pay for jet fuel; now, it is 40 percent, according to the Air Transport Association, the industry’s trade group.

If prices stay where they are, the nation’s airlines will collectively spend $61.2 billion this year on jet fuel — more than five times what they spent in 2002, when travel fell sharply after the September 2001 attacks.

Every increase in the price of fuel, already up 84 percent compared with last year, increases the pressure on the carriers, which pump about 7,000 gallons into a Boeing 737 and as much as 60,000 gallons into the bigger 747 jet.

Airlines are raising fares and adding surcharges and fees as fast as they can, but at a certain point, passengers stay home. That’s why the carriers are looking for any new savings they can find.

“Our fleet is over 500 airplanes,” said Beth Harbin, a Southwest spokeswoman. “If you can make a difference on one airplane on one flight, and multiply that by 500, in this day and age that is significant.”

Although airlines have tried fuel-saving measures for years, they attacked the problem with renewed urgency when oil passed $100 a barrel this year. Now, all airlines are urging employees to suggest ways, large and small, to cut fuel use.

Carriers save the most by parking aging aircraft, of course, and many are already doing so. Northwest is retiring DC-9 jets it has used for decades; American is grounding some of its MD-80s, while United is parking six 747 jets.

Each generation of aircraft is more efficient. At Northwest, the Airbus A330 long-range jets use 38 percent less fuel than the DC-10s they replaced, while the Airbus A319 medium-range planes are 27 percent more efficient than DC-9s, said Tim McGraw, Northwest’s director of corporate environmental and safety programs.

But even specks of dirt are considered culprits. American and Southwest are washing a handful of jet engines each night, a process that used to happen only during thorough maintenance overhauls. Southwest figures it has already saved $1.6 million in fuel costs since April by reducing the drag caused by dirt and debris.

American, for one, expects to save roughly $330.7 million this year, or about 3.5 percent on a total fuel bill that will approach $9.26 billion.

A number of airlines are flying their planes somewhat slower in order to save fuel — 480 miles an hour, for example, instead of the usual cruising speed of 500 m.p.h.

Five years ago, Delta estimated the travel time for flying between Los Angeles and Atlanta at 4 hours and 12 minutes; now it is 4 hours and 18 minutes at a lower speed. (The airline has not changed its timetable, which sets aside about four and a half hours for the trip, including taxiing time.)

Up in the cockpit, Delta is studying whether it is feasible to divide the heavy pilot manuals required on each flight between the captain and first officer, so pilots are not toting duplicate sets of five or six books that each weigh about a pound and a half.

Eventually, the airline wants to eliminate printed manuals and display the information on computer screens, a step the government would have to approve.

“That’s very much where we want to go,” said Gary Edwards, Delta’s director of flight control. “That’s the wave of the future.”

Passengers may notice other changes. Airlines including Delta are swapping heavier seats for models weighing about 5 pounds less. American is replacing its bulky drink carts with ones that are 17 pounds lighter. The airline said that move will help save 1.9 million gallons of fuel a year, on top of the 96 million gallons it is saving through other means.

Water is another target. Northwest is putting 25 percent less water for bathroom faucets and toilets on its international flights, Mr. McGraw said. Most planes had been returning from long flights with their tanks half full, an unneeded expense given that water weighs 8.3 pounds a gallon and a gallon of jet fuel weighs 6.8 pounds.

“Every 25 pounds we remove, we save $440,000 a year,” Mr. McGraw said.

Airlines also are trying to cut fuel consumption at the airport. Most now run their planes’ electrical systems at the gate by plugging them into outlets, rather than running the engines.

Many jets now taxi out to the runway on one engine, saving full power until in position for takeoff.

Some airlines are changing their landing patterns for certain flights. On red-eye trips into Cincinnati and Atlanta, some Delta jets descend steadily to the airport, rather than following the usual step pattern, which uses more fuel, when airports are busiest.

“We’re really fine-tuning to get to that sweet spot of efficiency,” said Mr. Edwards of Delta.

Northwest has studied everything from providing customers with packing tips to serving soda from two-liter plastic bottles rather than individual cans. But it decided that customers would balk at that idea.

“They like the can,” Mr. McGraw said. “They want the can.”

Mary M. Chapman contributed reporting.

http://www.nytimes.com/2008/06/11/bu...hp&oref=slogin