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Just wondering how worried those owning property abroad and those selling overseas are about the potential for the rising price of oil to send flight prices through the roof. Could this have a terminally detrimental effect on the industry or is it seen as merely a blip that will pass with time?
There are links to a number of pieces over the weekend here and here on Willie Walsh's declaration that we've seen the end of cheap flights as well as Michael O'Leary's prediction that only four European airlines could survive if oil prices hit $200 a barrel. Overall there are some pretty worrying predictions for what could happen to the aviation industry in the future.
I predict also the dollar is going to be back to 1.40 to the Euro by the end of the year so its a double whammy for european airlines - the weakness of the dollar would have offset some of those rising oil costs buts its going to go up as starlite says - to coin George Soros its a backward sloping supply curve
the likes of Cape Verde and Canaries are really going to be hit by this
My view: Sustained high oil prices causing expensive flights will certainly have an impact on at least the market psychology in the medium term (3-5 years), especially for markets that are dominated by Irish and UK based investors, but that isn't the real problem.Just wondering how worried those owning property abroad and those selling overseas are about the potential for the rising price of oil to send flight prices through the roof. Could this have a terminally detrimental effect on the industry or is it seen as merely a blip that will pass with time?
Bigrog, Where did you get this information and which routes?Just read that Ryanair are taking 20 planes out of service. I never thought Bulgaria, Egypt, Morocco, Cape Verde et al were good investments; even less so now.
They are cutting 20 planes from non profitable routes in the winter, something they've done before.Bigrog, Where did you get this information and which routes?
Possibly, but its also possible trends might change. Instead of trying to heat my house for say 3 weeks in the winter when oil is $135/barrel I might be able to offset it by going to the Canaries for 3 weeks where I have no heating bill and lower electricity costs because I can dry my clothes in the sun instead of a tumble dryer etc. OK it costs more to get to the canaries but you save more when you get there.
Cape Verde being further away is of course less viable.
Of course in the summer weather is better around here so people might not travel as far during the summer so the Canaries and CV could suffer a lot in the summer.
Possibly, but its also possible trends might change. Instead of trying to heat my house for say 3 weeks in the winter when oil is $135/barrel I might be able to offset it by going to the Canaries for 3 weeks where I have no heating bill and lower electricity costs because I can dry my clothes in the sun instead of a tumble dryer etc. OK it costs more to get to the canaries but you save more when you get there.
On what basis? Conventional wisdom would suggest the opposite will happen. The Middle Eastern and Asian nations hold approximately 70-80% of their reserves in US dollars and are on the record as saying in the medium term they'd prefer to get this figure closer to 50%. That, allied to the fact that a weak dollar suits any US administration running huge budget deficits make me think the dollar will weaken further.
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