The Future Of Air Travel: X-Ray Scanners, Groping, High Ticket Prices And Bankruptcy

Everyone is freaking out about the TSA scanners this week, and maybe a few people will quit flying in protest.

But that’s just a small step south for the airlines.

The huge issue is fuel costs. They are increasing much faster than any gains in efficiency. And although it’s been a wild decade for oil prices, most people agree that prices are going up.

Take a look at airline industry profit margins, from Dr. Charles Schlumberger:


Schlumberger, an airline specialist at the World Bank, gave this presentation at the recent peak oil conference in D.C. His outlook for the airline industry is very dark.

Capital costs and return on capital (eg ticket prices) are both increase -- how long until return on capital stops growing?

Computer reservation systems (CRS) are the most profitable part of the system... airlines themselves are the least

Losses are centered in the airline operators -- and that's a structural problem

Increased fuel efficiency will help the airlines... but gains are slowing

Fuel efficiency has not increased as much on large planes like the A380 and the B747

These are some of the tech improvements

Future improvements?

Alternative energy projects are happening around the world

Better logistics could also help efficiency

Buffett's conclusion: Stay out of the airline industry

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