Sky Talk

Airlines ask Congress to rein in energy speculation

The Air Transport Association, an airline industry trade group, testified before the Senate Committee on Agriculture Nutrition and Forestry and Appropriations Subcommittee on Financial Services and General Government (whew).

The group's chief executive, James May, called for more oversight of commodities trading to curtail excessive oil speculation, which many believe is a factor in this year's unprecedented spike in fuel prices.

"The impact of these unprecedented jet fuel prices on the airlines is devastating and airlines may see 2008 losses nearing $10 billion, on par with the worst financial year in aviation history," May said. "This year, airlines will spend more than $61 billion on fuel, slightly more than the total fuel bill combined for the first four years of this decade."

- Trebor Banstetter

Ryanair CEO predicts $100 oil

The CEO of Ryanair Holdings has a future as a fortune-teller if he's right on this one:

Michael O’Leary told reporters today in Frankfurt that he expects the price of oil to dip below $100 a barrel by the end of next year after reaching a “short- term” high of $150 a barrel, Bloomberg News reported.

Crude oil prices may decline to the lower figure in 12 to 18 months, O’Leary said, according to Bloomberg.

The Dublin-based airline, Europe’s biggest low-cost carrier, has struggled in recent months as record oil profits eat into earnings, Bloomberg notes. Ryanair is largely un-hedged for fuel-price increases in the current fiscal year through March 2009. Oil is trading at about $133 a barrel, almost double the price last year.

O’Leary declined to buy hedging agreements for fuel in February, when oil was at about $90 a barrel, saying he expected the price to fall below $80, Bloomberg said. The carrier said last month that it won’t hedge until prices fall to below $100.

-- Scott Nishimura

Virgin's Cush: 'Silver lining' in fuel prices

Virgin American CEO David Cush (a former American Airlines exec) said during a recent speech that high fuel prices may help his fledgling airline with slots at congested airports like New York Kennedy and O'Hare in Chicago, according to Aviation Daily.

- Trebor Banstetter

United hikes fares, matching Delta's increase

United Airlines climbed aboard Delta Air Lines' $20 roundtrip fuel surcharge increase earlier this afternoon, Rick Seaney of farecompare.com reports.

"This leaves US Airways, Northwest, and Continental with little or no matching activity," Seaney said in an email message. "I would be surprised not to see all three of them match by the end of the weekend."

Continental has had some "minor matching activity" on business fares in about 2,000 city pairs, "which is most likely attributed to their automated pricing systems and not a management decision to fully match the Delta-initiated systemwide increase -- yet," Seaney said.

Delta launched its increase Wednesday evening.

-- Scott Nishimura

Major carriers match United's airfare hike

The major airlines have all matched -- to varying degrees -- United's airfare hike of up to $20 roundtrip, Rick Seaney of farecompare.com reports.

US Airways, Continental, and American matched only at the $20 level. Delta Air Lines matched at the $10 and $20 levels. Northwest matched just after lunch, but Seaney didn't have an immediate report on to what extent.

"All matching was across their respective route systems, while continuing to tip-toe around low-cost airline routes and the very cheapest promotional leisure airfares flown by the fewest passengers," Seaney said in an email.

-- Scott Nishimura

Another airline bites the dust

First it was Aloha, then ATA, now it's Skybus that's calling it quits after being slammed with record fuel prices and a slowing economy.

The Ohio-based airline, which launched 10 months ago, had followed the European low-fare model of extremely cheap ticket prices (as low as $10) but extra fees for virtually everything in addition to the base fare, such as checked bags, an assigned seat or even a beverage. Flight attendants also acted as a sales force, peddling a variety of goods to the captive audience in the passenger cabin.

Here's what the airline had to say in a statement Saturday:

Skybus struggled to overcome the combination of rising jet fuel costs and a slowing economic environment. These two issues proved to be insurmountable for a new carrier.

We deeply regret the impact this decision will have on our employees and their families, customers, vendors, suppliers, airport officials and others in the cities in which we have operated. Our financial condition is such that our Board of Directors felt it had no choice but to cease operations.

Passengers holding reservations for Skybus flights scheduled to depart on or after Saturday, April 5, 2008 should contact their credit card companies to arrange to apply for a refund. More information for customers and others will be made available on the Skybus web site (www.skybus.com) as it becomes available.

The shutdown left hundreds of passengers stranded Saturday, and 450 employees out of work.

- Trebor Banstetter

$104 oil

Ouch.

- Trebor

Engine maker looks to go green

French-owned helicopter engine manufacturer Turbomeca, which has its major U.S. engine assembly and overhaul center in Grand Prairie, is looking to a greener future and has begun research into more environmentaly friendly engine technology.

"We know there's a desire for more environmentally friendly engines," Philippe Couteaux, vice president of aircraft engines for the company, said in a press conference Saturday prior to the opening of the 2008 Helicopter Association International Heli-Expo trade show in Houston.

Neither the technology or the economics for such engines exist now, Couteaux said, but the company is trying to develop technologies that can be perfected in time for the expected market demand.

The executive said work is focusing on engines that are significantly quieter, produce substantially fewer emissions of pollutants, and produce more power from lighter, smaller and less fuel consuming components.

Green engine technology is "really a strategic imperative for us," Couteaux said.

-- Bob Cox

Continental, United roll back on latest fuel surcharge

Continental and United airlines on Tuesday rolled back the $20 roundtrip airfare increase that American Airlines implemented last week, Rick Seaney of the farecompare.com tracking system said.

That represented the second straight increase that the airlines haven't been able to make stick. United's $50 increase failed last week. The airlines attempted to implement the fare increase by raising their passenger fuel surcharges.

"It appears that a combination of uncertain future in air demand...and certain airlines like Continental who have been very selective in matching has made it difficult for the past few increases to stick," Seaney said in an email. "That said, it would not be surprising to see another increase attempt later this week."

-- Scott Nishimura

Northwest matches AA's $20 fuel surcharge hike

NWA's move leaves US Airways on the sidelines as the only of the six legacy carriers that hasn't matched the surcharge increase, Rick Seaney of the farecompare.com tracking system said Saturday. "They will most likely match this weekend," he said in an email.

-- Scott Nishimura