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Australia.
Preparing Australian aviation for a new world
by Geoff Dixon=20
Aviation is a fascinating industry, but it is also a challenging one.
For almost 90 years QANTAS has developed a cultural strength that
enables us to cope well with crises. We have shown great resilience
through numerous major shocks over the past decade alone.
But right now the global aviation industry faces, not a shock or a blip
- not even a crisis - but a permanent transformation. The drivers of
this transformation will be globalisation, accelerated by permanently
high fuel prices. And the result will be a new aviation world order.
... Oil, of course, is a finite natural resource and whether or not the
world has reached "peak oil" is a matter of debate. But there is no
question that the cost of finding and extracting oil will continue to
climb. Today's fuel prices also derive from a long period of sustained
global economic growth, notably in China, India and the Middle East. And
this, of course, is the result of globalisation.=20
Everyone in this room today is feeling the impact of high fuel prices.
And while we welcome last week's sudden drop in prices, there is no
guarantee that this trend will last.
Right now airlines around the world are cutting routes and capacity,
grounding and retiring aircraft, and shedding staff - it is likely that
100,000 jobs worldwide will be lost before this calendar year is out. In
the past six months alone 24 airlines have closed down completely. The
major US carriers are now planning to ground 465 aircraft - that is more
than twice the size of the QANTAS fleet.=20
On Friday we announced the QANTAS response to this new era, based on
suspending recruitment, cutting jobs and reducing capacity. It is very
tough, especially when our people have been so steadfast and flexible
through these years of constant change. I wish it were different, but
once again we have no choice but to manage actively to preserve a
sustainable base for the group.
This financial year QANTAS expects to pay around two billion dollars
more for fuel than last year. This increase represents more than our
projected profit before tax for 2007/08.=20
By further cutting other costs and by increasing our fuel efficiency we
can reduce somewhat the need for a rise in fares to compensate, but we
simply cannot offset the full amount.
... Jet fuel is currently around 167 us dollars a barrel, including a
refining margin of 33 dollars a barrel, which is more than double the
historic average over the past three years. And if we look over prices
going back to 2000, the refining spread has averaged 8.38 US dollars a
barrel so the margin has in fact quadrupled.
These realities are changing the underlying economics of aviation,
permanently.
... Over time, consolidation will transform aviation. It will produce a
few, very large and extremely efficient global airlines with a portfolio
of interests and brands - like Air France and KLM. These players will
have enormous power in marketing, in fuel buying and hedging, in
aircraft purchasing, and in reach.=20
There will still be niche airlines with specialist offerings - whether
for business or leisure travellers - but these will need to be run very
skilfully, and any weakness will lead to a quick death.
And there will also remain those powerful, government-backed airlines,
particularly from the oil rich states. These governments will continue
to use aviation services as instruments of national economic
development.
... The size of the aviation industry in the coming years will be
significantly determined by the amount by which fuel prices rise. The
industry structure will be on a global scale, and focused on maximum
cost constraint and efficiency. Over the next twelve years many more
airlines will vanish, unable to cope with high fuel prices, or they will
be swallowed up in takeovers or mergers.


From:
http://www.qantas.com.au/regions/dyn/au/publicaffairs/details?ArticleID=3D=

2008/jul08/Qxxxx

Or if you wish to view without all the caps:
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Best Regards
Matt

David Matthew Ashleigh
Broadcasting Service Officer
0423 781 327=20
02 6277 8188
Broadcasting office 02 6277 8603
Broadcasting fax 02 6277 8389
Department of Parliamentary Services
Room SB011, Parliament House
PO Box 6000, Canberra ACT 2600=20
matt.ashleigh at aph.gov.au=20