The Apparently Unstoppable Growth of Air Travel
This graph of passengers flying shows that though 9/11 slowed things down in America for a while, they soon picked up, despite jet fuel prices ramping skywards.
The other notable parameter is the decline in the number of staff employed. This may in part help explain why air travel has become such an unpleasant affair in the last few years. But not nearly unpleasant enough to dissuade us from doing it evidently!
Two analytical observations leap out: demand to fly is virtually price inelastic - it doesn't seem to be remotely negatively affected by jet fuel cost, in fact it almost appears to be caused by it (which surely is not the case!). Secondly, in order to keep ticket costs down as fuel prices have more than doubled since 2002, staff levels have been cut back to levels last seen in the mid 90s when passenger numbers were about a third less. There is only so much labour that can be cut in a business serving people, so there must come, at some stage, a time when fuel costs really get passed on the consumer. (Ticket price is not shown on this graph - if anyone has these data, please let me know.)
Julian Darley
Post Carbon Institute
2007-06-17
What industry out there is going to start passing along the rising cost of fuel until it has to, especially if the consumers of that product are facing rising costs in other areas of their lives, and they're flying for fun, rather than business. That's what's so insidious about energy prices, outside of gas for cars or home heating oil. The cost of the fuel is embedded in a larger package, so the cost of fuel is only a small part of the total cost. So do you really notice if the price of bread goes up a few pennies (assuming you're not poor to start out with?) But if the cost of fuel keeps going up, eventually the price inflation going to start hurting everyone across the board, except for those lucky lucky people at the top of the economic ladder whose percentage of the total take keeps getting larger. For about 80% of the rest of us, we'll hhave to start cutting back on something, which is when the real economic fun begins.
I personally beleive that they are working on other fuels!!! In fact, Richard Branson of Virgin Atlantic is going to run a 777 using more than 60% less petroleum as early as next year. Similar projects are underway by Boeing, Baylor University, University of North Dakota, North Carolina State University, the US Air Force, Scandavian Airlines, Syntroleum, GreenFuel Technologies, and many others!
There was a link to an Article on PeakOil.com a while ago that says that Algae could be the jet fuel of the future. I did some reading on this, that said that a pool the size of Maryland would easily create enough jet fuel to fuel air travel sustainably. The advantages of Algae are enourmus, as you get over 10,000 gallons per acre versus 60 gallons of soybean based biodiesel. 3-4 acres would be enough to fill the tanks of a 747, compared to 583 acres of soybeans. Additionally, algae handles the cold tempatures better, too I have heard. Matthew Simmons also mentions "Algae Biofuel" as a "Pleasant Suprise" in his presentations at Simmonsco-intl.com. Some others propose Hydrogen and Nuclear fuel for planes as well.
I am not saying by any means that plane travel should or will be as abundant as it is today in the future. If it were me, I would propose replacing shorter distance plane travel with higher speed electric railways that do 200 or 300MPH as an alternative. It seems as if some of the "Magnetic Alternating Pole Linear Induction" technology used to acclerate trains and amusement park rides could be used very effectively in transporting people in the post-peak oil era.
Even if commercial air travel does die, I beleive that we could still see some of the elite travelling in the air, as well as government and national security functions. I am sure that some rich hobbyist for an occasional celebration might get a plane up in the air once in a while, to celebrate something from the past, similar to those who collect other classic cars, boats, and other things from the past.
I learned the other day that all air travel is outside the Kyoto protocol! How bizarre is that? What might the rationale be, and how did whoever it was that orchestrated that 'wing it'?
I was inspired to do a little reading on the topic of fares, costs and airplane travel consumption.
According to Duke and Torees (http://www.bls.gov/opub/mlr/2005/03/art3full.pdf) airline productivity increased three times faster that of the general economy during the final quarter of the last century.
According to the US Dept of Trans. (http://www.dot.gov/affairs/bts3506.htm), the Air Travel Price Index, which appears to be a nominal index,has barely budged in the last 10 years,
I read on a CNN article that business travel is up, which we know is very insensitive to price, because the labor cost of any trip far outweighs travel expense. As well, the more globalized our economies become the more we should expect business opportunities and family trips to involve more miles in flight.
On a side note – it’s true that we’re inculcated to believe that price drives behavior according to the ‘law’ of supply & demand. It seems, though, that the more we learn about consumer behavior the more we realize that social and idiomatic factors influence consumer behavior, like what our friends do or what we’ve always done before. As well, how our lives are organized, regarding what job we have and where we live, determines a great deal that resists changing with a small fuel price spike.
The following link has some pretty good charts of airline travel costs. Go there and scroll down to the charts link and open the PDF file. -- Roger, Austin
http://www.airlines.org/economics/finance/Cost+Index.htm
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