ATW Editor's Blog

Oil & Regional Jets:Ominous unknowns


If you could sum up what is most on people's minds in this industry, then judging by presentations so far at the Boyd Group International Aviation Forecast summit in Dallas, it comes down to oil and the future of small jets.

With oil, it's not so much about the price, although that is a clear and real pain point, as it is about the volatility, as several speakers here pointed out.

Oil is not just the dominant cost, it's a cost outside of an airline's control and - more and more - it's becoming a cost that cannot be predicted.

But outside the volatility question, most are assuming that high oil prices are a long-term fact. And that leads directly to the other big question - do 50-seat jets have a future?

Asked about that, Air Lease Corp. CEO Steven Udvar-Hazy said a lot depends on oil prices. "But on the long-term horizon, there is going to be upward pressure on oil prices, and that makes a lot of people look at the 90-100 seat turboprops as an alternative to current generation aircraft, " he said.

David Neeleman, former JetBlue founder and now founder and CEO of Azul Brazilian Airlines, which operates a mix of Embraer E-Jets and ATR turboprops, said the ATRs operate with a 35% better fuel burn. "In the first hour of the flight, the ATR just kicks the jets," he said. "I think there will be a resurgence of the turboprops."

Delta Air Lines has made its decision and is shedding its CRJs as fast as it can. But then Delta is addressing the oil volatility issue like no other in the industry: it has bought a refinery.

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