07 November 2008

Shoe's on the other foot - Transatlantic Airline Capacity

Humour me here for a little bit. One lesson we learned from the past summer's dramatic surge in oil prices and its corresponding impact on petrol and Jet-A was the impact did not reach the European carriers as badly as it affected the US airlines.

The major European carriers saw the impact of oil to some extent mitigated by the rise in the value of the pound and the Euro against the dollar. Further their ability to charge surcharges made the rises all the more palatable. Thus while there was not a huge increase in traffic - largely the European traffic held its own with Iberia, Air France/KLM, Lufthansa doing pretty well. BA had its own share of problems due to the disastrous opening of T5 at LHR.

Fast forward to next year's summer season and if things hold steady (BIG CAVEAT!) then we will see a reversal of fortunes.

The US airlines will have seen a dramatic fall in the price of JetA back to still high levels of $70-$80 per barrel based. But the dollar's now high value as a result of plummeting pounds and evaporating euros will encourage the US based traveller back into the market.

We are already seeing some new activity. Delta announced yesterday that the AF/KL/NW/DL Transatlantic Alliance will open up 2 new routes to Paris, one from Pittsburgh (currently a ghost town masquerading as an airport) and the other from AA's minor hub at Raleigh Durham's RDU. Paris seems to be popular since US Airways had previously announced new summer service from Charlotte - reinstating a cut service from several years ago. All 3 services will be offered with 2 class 757s.

Stay tuned - this could be interesting.


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