New York Times: “Falling Oil Prices, a Boon to Airlines, Pose a Challenge for Airbus and Boeing”

When I was watching BBC News, they were referring to International New York times article about the challenges that both Boeing and Airbus are facing due to lower oil prices.

New York Times Falling Oil Prices, a Boon to Airlines, Pose a Challenge for Airbus and Boeing

Many of the airlines have been buying new more fuel efficient aircraft due to ever rising fuel costs that have now collapsed.

You can access the New York Times article here.

Here’s an excerpt from the piece:

Any prolonged slowdown in the overall replacement rate could put the brakes on Boeing and Airbus delivery rates, analysts said. A study published last year by Ascend, an aviation consultancy based in London, found that about 50 percent of all new jet deliveries over the past five years had been for replacement purposes rather than growth, up from a long-term average of 43 percent since 1990.

Despite the prospect of a sustained period of lower fuel prices, plane makers are showing few signs of concern.

“They may decide to hold on to older planes a little longer,” Darren Hulst, Boeing’s director for market analysis, said of airlines. “But they will still need new aircraft to continue to grow and take advantage of the tailwinds in the operating cost environment.”

Referring to the lower projected fuel usage of coming jets like the Boeing 737 MAX or the A320neo, he added: “20 percent savings is 20 percent, no matter where the oil price settles.”

Conclusion

The price of oil has fluctuated a lot over the years and is a major cost for the airlines. The lower cost of the Jet A will probably lessen the need for the airlines to urgently move to more fuel efficient planes, although in the longer run it is the wisest move.

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