By For airlines, the year 2008 was one long horror story, as oil rose from $65 per barrel (in U.S. dollars at the beginning of the year) to more than $130 during June. By that time, the International Air Transport Association (IATA), whose members represent 90 percent of global traffic, said airlines were staring down the barrel (pun intended) of a potential $6 billion loss.
Cuts to standard features and amenities - the amount of luggage that could travel for
free, pillows for comfort, and meals - were slashed across the board, rousing the ire of frequent fliers and the fear in economic circles that the airline industry was facing a repeat of 1986, when Continental, Eastern and Pan Am all stared down the bankruptcy barrel, followed by TWA in 1991. Continental recovered, and Pan Am struggled along until 1991, but Eastern is officially dead, and TWA was gobbled up by American.
Because fuel accounts for between 30 and 40 percent of operational costs for many airlines - rising as high as 65 percent for smaller ones - the IATA was forced to report likely losses of $10 billion, as opposed to a 2007 profit expectation of $4.5 billion.
By Labor Day, when fuel reached over $147 a barrel, big airlines like Continental, Delta, United and American Airlines were cutting flight schedules, loading up passengers in elbow-to-elbow flights, pumping up prices as much as 70 percent, and substituting expensive sandwiches and salads for regular meals on flights over three hours for those flying economy and business class.
The Economy Falls Out of Bed
Then came the financial meltdown, with the Dow Jones dropping below 8,000 in November of 2008, for the first time since 2003. It was the old Catch-22; fuel prices were suddenly affordable, but people could no longer afford to fly. International air traffic, which had already fallen 2.3 per cent in September, fell another 1.3 percent in October, and large, commercial airlines were staring down a different kind of barrel; flights running on empty, at least in terms of passengers.
Another kind of unkind cut was instituted, at least to those flying for business. You could still get to Chicago, but with only six flights a day instead of 12, you were likely to be too early or too late, which often meant booking an expensive hotel room.
Now into the first months of 2009, fuel is back to about $80 a barrel, but demand is at its lowest since 2001. This "perfect storm" has already resulted in more than 30 airline failures worldwide. IATA anticipates global traffic falling another 3 percent in 2009, with losses in the $5-billion range as worldwide economies adapt to the recession.
"Weakness in travel markets has lasted three years in previous recessions," the IATA observed in its recent report. "We do not expect a return to traffic growth above 4 per cent until 2011. Economic forecasts imply that airline traffic will remain below the previous trend over the medium-term, with passenger travel forecast to be 9 per cent lower by 2016 than pre-crisis industry forecasts."
Experts see U.S. airlines facing fewer fliers, and thus a cutback on nonprofitable flights to smaller hubs, or at least fewer flights. On the upside, the strong value of the dollar against international markets should see more international flyers. This won't help the airline job industry however, with major carriers Continental and United talking about pooling frequent-flier programs, purchasing, IT platforms, and catering services to cut costs.
Baggage costs to passengers are destined to remain the same, and the airlines will likely institute even more revenue builders. That pack of peanuts may still be available, but only if you are hungry enough to fork over $2. Airline cargo traffic will also shrink during 2009, to reflect lowered GDPs, but experts predict a recovery in 2010.
Unexpected Impacts
The upside is, less air traffic also means less air pollution. According to a study by the Natural Resources Defense Council, airports are the major cause of ground-level ozone and smog. This is because airplanes do not have catalytic converters to minimize harmful jet fuel emissions, and the emissions from just one airplane equal those of 3,000 cars.
Airplane (and ground crew) emissions contain at least 14 hazardous air pollutants, including formaldehyde, benzene, xylene, toluene and naphthalene and lead. Let's just consider xylene, a benzene derivative which has definite and potent neurological effects. Embryonic studies show that high concentrations of xylene can cause delayed growth, delayed development and even death to fetuses. The principal pathway of exposure, for most people, is xylene deposits in soil, which result either from leaking tanks or excess deposits (via airline traffic) that leach into soil.
How much pollution is the airline industry contributing? Chapter six of the latest IPCC report says it will account for as much as 15 per cent by 2050, assuming that other sectors like shipping and automobile manufacture don't reduce emissions. If they do, the figure rises considerably. Other experts estimate a much higher figure - some as much as 25 percent of all emissions.
In any case, the footprint of the airline industry isn't small. For example, if you fly from the U.S. to Europe and back, you will have added between 3 and 4 tons to your carbon footprint, which is already huge if you live in America. In fact, with this one flight, you will have created a larger footprint than three Venezuelans, 20 Bangladeshi, and 22 Moroccans generate in an entire year.
Flights of the Future
What can be done? The financial crisis has already done a lot to curb emissions, both in airlines and other transportation sectors. The next step is to identify, create and subsidize environmentally friendly, sustainable alternative fuels. These do not include food crops like corn or soy, but rely on crops like jatropha, which a New Zealand airline has already used in a two-hour demonstration flight.
According to Air New Zealand, one engine of a Boeing 747 was powered by a 50-50 blend of A-1 jet fuel and jatropha oil. This alternative fuel, if successful, would not only help reduce airline fuel costs, but provide a fuel that has an even lower freezing point than jet fuel, making it safer as well.
Jatropha, a shrubby weed originating in the Caribbean and since naturalized on the East Indian subcontinent and Africa, grows on soils crop foods won't tolerate and requires very little water.
Jatropha is not likely to be the ultimate answer, of course, but algae-based oil might well be. Until one, or the other, becomes commercially feasible, you can do your part by flying economy class, booking the most direct route possible and buying carbon offsets. Or, better yet, take the train. President Obama did.
Related Reading:
GE and NASA Partner on More Efficient Jet Engine
Recent Developments with Algae Biofuel
Image Credits:
Mr. mt
Flybirmingham.com
