CITI: Oil Prices Are In The Aircraft Industry's Sweet-Spot

Airlines have incentive to buy new planes as opposed to flying older, less fuel-efficient planes when oil prices are between $80 – $130 per barrel, according to a new Citi report by Jason Gurksy and Jonathan Raviv.

If prices were any lower, then the airlines could just stick to their old gas guzzlers.  If they were any higher, then the airlines wouldn’t be able to afford the new planes.

Here are two charts that show the relation between oil prices v/s gross orders in the last 21 years and the relation between oil prices and new aircraft demand.

chart

Photo: Citi

chart

Photo: Citi

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