Airline industry backpedaling on expansion?
Posted Aug 15, 2008 by Daniel Lerch
After my presentation to the Anchorage (Alaska) Municipal Assembly last week, I chatted with a local businessman who gave me a piece of surprising news: local airline industry reps recently came out against an expansion at Anchorage International Airport.
What a change from the days of the industry pushing airport-centric development! I've written about the 'aerotropolis' concept before, but this was a new one for me -- recognition by the industry itself that energy prices aren't going down, and that expansions are not only unwarranted but can be financial liabilities.
The New Republic has just published an article by Bradford Plumer on The End of Aviation. It reiterates some things Richard Heinberg said in his article Say Goodbye to Air Travel this past May, and it includes two quotes that I think bear repeating (especially for any market solutionists in the audience):
- "Despite recent fluctuations, a growing number of economists are bracing for oil to hit or surpass $200 per barrel in a few years, and most industry analysts agree with Douglas Runte, of RBS Greenwich Capital, who told The Wall Street Journal in June, 'Many airline business models cease to work at $135-a-barrel oil prices.' "
- "...[A]s the Intergovernmental Panel on Climate Change concluded in its landmark 1999 aviation study, 'There would not appear to be any practical alternatives to kerosene-based fuels for commercial jet aircraft for the next several decades.' "
As I often say in my presentations to government audiences, we need to keep our eyes on the big picture. The fundamental factors of oil supply and demand are changing, and the sooner you adjust your planning and budgeting -- whether you're a public agency or an airline company -- the better.