Quick Fuel Check

The price of fuel continues to rise, but I don’t think it’s easy for most people to really grasp how devastating this is, because it’s rarely put in normal terms. $125 a barrel? What the heck does that mean in reality? JetBlue, when they pulled out of LAX before even starting, gave us a number to work with. They say that it now costs more than $15,000 to fly a plane across the country. So let’s do a little math.

Each A320 they fly has 150 seats. Let’s say they fly with 85% of their seats filled on average. That means 127 seats are filled. If you take that $15,000 cost and divide it over 127 people, each person has to fork over $118 each way just to cover fuel.

Seriously. Remember those days of $99 each way across the country? That wouldn’t even cover fuel these days. And that $15,000 estimate came out when fuel was lower than it is now. If you find a low fare, be thankful. They’re going to continue to become more scarce.

(Visited 46 times, 1 visits today)

Get Posts via Email When They Go Live or in a Weekly Digest

Leave a Reply

24 Comments on "Quick Fuel Check"

avatar
Sort by:   newest | oldest | most voted
David
Guest

Does the $15,000 number that JetBlue quoted refer purely to fuel, or does it also include things like plane lease / debt interest payments, navigation charges, cost of employing crew and all the other fixed costs before a single passenger gets on the plane ?

Jet fuel is currently a little over $1,100 dollars per metric tonne, so $15,000 buys no more than 13 tonnes

Mike
Guest

And yet I still hate paying more then $99 each way, even if it is across the country.

SeaFlyer
Guest
Another way to think about it is this. A ~70% increase in the price of fuel for the aggregation of top 10 US carriers results in a 15-20% increase in overall unit costs, which means that this past month (or quarter) when carriers reported RASM growth in the 5-10% range, they were essentially only able to recoup 40-60% of the fuel cost impact to their business, resulting in a margin drop of 5-10 points, which was the driving force behind the $2B year-over-year reversal in industry profitability (excluding special items). Fares need to go up 15-20% and lots more capacity… Read more »
David
Guest

Correction – was looking at old data. Fuel is about $1,250 per metric tonne

David
Guest

Sorry – meant to tie this all into one post.
Does anyone have figures for various plane types – e.g. 50 seat regional, 150 seat narrowbody, and 350 seat widebody of typical fuel burn rates ? Yes, I know that an extra 100 people means an extra 8 or 9 tonnes of weight, and that gaining altitude is more fuel intensive than cruising, but something approximate would be very helpful.

In addition, does anyone have ex-fuel figures for costs per available seat kilometre for both a typical no-frills carrier, and a network carrier ?

Adam
Guest
I have read that fuel burn on CRJ’s and smaller aircraft is much higher than that of a 737 or A320, but every year I end up on more CRJ’s than the previous year. However they haven’t cut the number of roundtrips per day to business destinations, i.e. Chicago, Dallas. Seems to me it would make more sense to fly one or two trips per day with larger aircraft. And I’m crossing my fingers that someday the fares will directly correspond to distance traveled. I always thought it ridiculous that people were paying so little going from JFK to LAX… Read more »
OAG
Guest

$118 per person doesn’t sound too bad. How much is it if your in the lav?

CS
Guest

Sorry if this is a dumb question, but I know that in the US we pay a lot less for gasoline for cars than in Europe and other countries. Is that true for jet fuel as well? Or does the relatively smaller number of larger volume consumers of jet fuel and the fact that flights (and airlines paying for fuel) crisscross the globe mean that the price is fairly consistent worldwide?

Benji
Guest

I paid $260 rt east to west coast for a trip in June, and I’m grateful for that. Absolute lowest I saw was $230. But now for me to take a trip to Europe or somewhere from NYC is over $1000! Man, this is awful. I want to blame our President, but I don’t even know where to begin.

flylbb
Guest

hmmm….last time fuel got this bad (accounting for inflation) was the early 80s….and we lost or almost lost

Braniff
Eastern
Continental
Frontier (Mark I)
Altair
Air Florida
Air New England
Northeastern International

joshuabmarks
Member
Since JetBlue gave detail on the Airbus, here is some Boeing fuel info for current production aircraft that might be helpful. These are rounded based on a full payload of passengers and baggage. Fuel is assumed at $3.75 per gallon including taxes. 2,000nm flight segment 737-700 25,000 pounds $13,992 total fuel burn 126 seat capacity, 107 actual pax = $131 per pax 737-800 28,000 pounds $15,670 total burn 162 capacity, 138 actual pax = $114 per pax 737-900 32,000 pounds $17,910 total burn 180 capacity, 153 actual pax = $117 per pax 767-200 45,000 pounds $25,180 total burn 181 capacity,… Read more »
Nick Barnard
Member

I wonder if carrier’s fuel hedging is tied to when a ticket is purchased. Since you can get a ticket almost nine months in advance fuel can change significantly between when a ticket is purchased and when the travel is completed. When they do hedging for fuel are they attempting to account for this risk, or are they really just investing their excess cash in something they can use?

Dan
Guest
CS – this might explain about jet fuel costs: Gasoline for cars is taxed much more heavily in most countries in Europe compared to the USA – this tax difference is why the retail price is so different. Other local factors tend to be pretty insignificant in comparison. Jet fuel on the other hand (by treaty ?) is always available either tax free or at a very low tax rate – this was designed specifically so that airlines would *not* tanker in fuel so as to arbitrage between the tax rates of different countries and thus create a jet fuel… Read more »
David
Guest
Nicholas – hope this helps on hedging – sorry if it’s a little long ! As to hedging of fuel, the main driver of the fuel is getting the empty plane from A to B. The passengers and their luggage by comparison weigh relatively little. Assume an average person weighs 75 kg (165 lb) – children tend to balance out those who weigh over 200 lb, and that people carry an average of 20 kg (45 lb) of total luggage, the weight per passenger is about 210 lb. On something like a 737-800, with an 85% load factor, this means… Read more »
Benji
Guest

flylbb – I think some of those airlines went away for other reasons (eg, Air Florida)

But if this is true and airfares are expensive in the US because of gas prices, why isn’t this true for flights within Europe, where gas is even more expensive (hence the smaller cars, which also help navigate the narrower streets)? I mean, granted trans-Atlantic flights for this summer are $1000+, but I would have thought fares would be higher over there in general since $4/gallon is still “cheap” for most of the EU.

Adam
Guest

Looks to me that the airlines should cut their capacity down and start flying 737-800’s at full capacity. Sun Country touts their 737’s as being the most fuel efficient aircraft out there per passenger seat mile. Guess that’s how they underprice NW’s DC-9’s on the the same route.

flylbb
Guest
it’s true that the early 80s failures weren’t tied directly to fuel…but most of these carrier’s did have bloated business plans that weren’t effective for the enviroments they were operating in. this is more my point. Super Savers (as coined by AA) didn’t come into effect until around this time. Yield Management was birthed around this time. And I’m not just speaking on jet fuel itself….as Consumer Fuel prices probably did have some effect on consumer demand even as dereg took off…but whatever effect was quickly masked by falling airfares. Overall, the late 70s and early 80s were not economic… Read more »
CS
Guest

Wow, thanks Dan!

seth
Guest
JetBlue does publish their CASM both with and without fuel. As of 3/31/08 the fuel cost was about 3.5 cents per ASM. At 150 seats and ~2500 miles the fuel cost would have been ~$13K. And fuel costs have gone up since then. That being said, the overall CASM for JetBlue is ~9.5 cents, meaning that “other” costs are also a huge issue for the airline to account for. That being said, the non-fuel CASMs have been going down while fuel CASM has been going up. The airlines can choose to cut some costs, but they still need to tank… Read more »
David
Guest
The price of jet fuel comes from 2 things: 1) Price of crude (I’m treating crude as a homogeneous product – ignoring things like sulphur content) 2) Cost of refining the crude to separate oils, including jet fuel. The cost of refining is really quite small compared to the cost of raw crude. Thus, predicting the price of jet fuel is almost the same as predicting the price of crude oil. Because crude oil is such an important product to the world economy, markets are very good at pricing it accurately based on publicly available information – the possibility of… Read more »
wpDiscuz