A Chilly Wind as Oil Demand Picks Up
A few days of chilly weather, an increase in political tension or a short-term production issue frequently leads to a spike in the price of oil as the world panics at the thought of shortages. In the last few years the relatively low price of oil has given the aviation industry a welcome boost with market prices of around US$50 a barrel, in part accounting for some exceptional levels of profit for the industry. The expected impact of the increased oil price is around US$35.4 billion this year, according to IATA.
There should be a shiver spreading through the industry. In the last year the price of oil has increased by some 22.5% and by 4.7% compared to the previous week. At such times, as with your family car, “gas guzzlers” suddenly become expensive to operate and if possible are off-loaded for cheaper more efficient models. With that in mind, we’ve taken a quick look at which airlines are the “guzzlers” and most affected by the oil price notching up, typically those operating older, less efficient and more fuel hungry aircraft.
In total, and based on OAG data, there are nearly 125,000 scheduled flights planned this year by the principle four engine aircraft types in service, with an almost “Brexit” level split between the B747 and A340, as the chart below highlights.
In terms of actual hours flown, and fuel burnt, the A340 accounts for 52% of all planned flying in 2018 and Lufthansa is the single largest operator; it has some 31 of these widebodies in operation producing nearly twice as many hours flying as second placed Iberia which has 17 A340’s operating.