With oil prices nearing $110 a barrel as of early March, 2008, it’s reasonable to ask which segments of the passenger air transportation industry will be hardest hit by the inevitable avgas price hikes — scheduled airlines, charter companies, or VLJ air-taxi services. Though actual numbers are impossible to calculate because of the effect of gross weight, speed, wind and a dozen or so other factors on fuel flow, the simple answer is probably this: If every carrier filled every available seat on every possible flight, the net effect of skyrocketing fuel costs would probably be about the same for all of them.
Or, to put it another way, every carrier’s energy costs would rise by roughly the same percent, forcing each to either raise passenger fares (or in the case of charter operators, hourly rates), trim costs in other areas, or operate at significantly lower profit and return on investment rates.
Sadly, unless you happen to be one of the millions of airline passengers who enjoys being able to spread yourself, your iPod, your laptop and the rest of your carry-on rubble across three seats, no passenger carrier of any kind can operate at full capacity 100 percent of the time. In fact, very few carriers operate at full capacity any of the time … flights taking off with empty seats vastly outnumber those which leave 1, 10, or 100 excess passengers behind to battle about the value of their denied boarding compensation.
Realistically, scheduled airlines will be hardest hit by increased fuel costs. Unlike charter and air taxi operators, they can’t just leave their aircraft in the hanger when there’s no business. They have to (at least in theory, though bogus flight cancellations for “technical difficulties” are hardly unknown) burn black gold from Point A to Point B regardless of whether their 737-200 is hauling 120 passengers or 12.
And, thanks to deregulation and despite the industry’s many mergers, the still massive competition in the airline industry makes implementing major fare increases difficult, particularly for those carriers teetering on the brink of bankruptcy anyway.
As Northwest Airlines CEO Doug Steenland put it “if oil remains above $100 a barrel, it will cost Northwest $1.7 billion more than it planned for” in 2008 and “will again create a difficult financial challenge for the airline.”
Lest anyone misunderstand what Steenland means by “difficult financial challenge” again, we should remember that Northwest has only been out of its last bankruptcy for less than ten months.
Where Steenland is gloomy about energy price increases, his opposite number at Delta Airlines, which is frequently cited as a potential merger partner for Northwest, is a bit bellicose.
Keynoting an FAA conference in early March, Delta Chief Executive Richard Anderson lambasted the federal government for doing little or nothing to cap fuel prices.
“We don’t have an energy policy in this country,” Anderson said. “We really don’t have any conservation measures in place … jawboning OPEC is not an energy policy.”
While it’s hard to dispute Anderson’s premise that the U.S. lacks a coherent overall energy policy, it is easy (and correct) to argue that he obviously wasn’t thinking about VLJ air-taxi service when he said we don’t “have any conservation measures” in place, at least as far as air travel goes.
Simply put, a VLJ flying at partial capacity — say two out of four seats filled — uses far less fuel per passenger mile than an airliner with 60 of 120 seats filled.
One factor is design age. Back when today’s generation of jetliners and light jets such as the Lear and the Gulfstream were incubating, fuel economy, pollution, even — to some extent noise — were not major engineering considerations. The design gods were maximum payload, speed and range. Over the decades priorities have changed and those designs — particularly in regards to engines and control surfaces have been substantially improved. Current generation 737-500s, for example, are far more fuel efficient and “green” than the 737-100s which rolled out of Boeing’s Seattle fab shop in the late 1960s.
But upgrades can’t compete with ground-up designs in areas like materials and aerodynamics. Using lightweight composites unavailable to earlier generations of jet designers, Computational Fluid Dynamics modeling and open-jet wind tunnels, VLJ engineers have created fuel-efficient, environmentally friendly aircraft that virtually ensure that their operators will suffer less from escalating fuel prices than competitors using yesterday’s aircraft for short- and mid-range point-to-point transportation.
Better still, from the POV of all us end-users, the inherently more efficient nature of VLJs should bring the cost of a fly-on-demand air-taxi trip even closer to a first- or business-class airline ticket in the future than it is today.