$100 dollar barrel of oil and Fractionals

[MALSR]

How does $100 barrels of oil affect the fractionals vs. the airlines. I know you guys pass some of the cost onto owners but will that discourage them too? Lets face it, oil prices are going to keep climbing with global industrialization and such. I'd like to figure out if this could be good or bad for those of us considering jumping from 121 jobs to fractionals. Thanks in advance.

 

[Sparse]

How does $100 barrels of oil affect the fractionals vs. the airlines. I know you guys pass some of the cost onto owners but will that discourage them too? Lets face it, oil prices are going to keep climbing with global industrialization and such. I'd like to figure out if this could be good or bad for those of us considering jumping from 121 jobs to fractionals. Thanks in advance.

I heard the CEO of CS say, with my own ears, that price was not the concern, but availability was.

 

[johnsonrod]

How does $100 barrels of oil affect the fractionals vs. the airlines. I know you guys pass some of the cost onto owners but will that discourage them too? Lets face it, oil prices are going to keep climbing with global industrialization and such. I'd like to figure out if this could be good or bad for those of us considering jumping from 121 jobs to fractionals. Thanks in advance.

I am no expert, but don't the fractionals still get hit on the repositioning flights that they have to pay for????

I really doubt that an owner who can afford a share in a $10-30 million airplane would care that much about the incremental fuel cost... They may notice the difference (business people, for example, will notice the bottom line), but that would not be enough to avoid flying fractional - anything to avoid flying commercial with all of the crowds and TSA hassles...

 

[Murphy]

When I interviewed with NJI, their sales pitch was that when the economy was good, business was good because people had money to try fractional flying who hadn't tried fractionals before.

When the economy was down, corporations shutdown/reduced their corporate flight departments and turned to fractionals because they still had travel requirements.

Fractional sales pitch to the interviewees was that it was a win-win situation for the fractional business model regardless of the state of the economy and a good reason to not do the Part 121 gig.

I didn't get hired by NJI and am doing the 121 gig. I've got friends at NJI and NJA and they have nothing but good things to say about the job.

 

[CA1900]

How does $100 barrels of oil affect the fractionals vs. the airlines. I know you guys pass some of the cost onto owners but will that discourage them too?

We have people who'll send a Falcon to pick up their dogs (and only their dogs) to fly them to get a haircut. I guess everybody has a limit, but I don't think we're anywhere close to it.

I'd like to figure out if this could be good or bad for those of us considering jumping from 121 jobs to fractionals. Thanks in advance.

I think it'll have a much, much stronger impact on 121 carriers than fractionals.

 

[Freight Dog]

Fractionals pass the buck to their customers - a novel idea that most airlines haven't figured out.

My former boss owned a 2004 King Air 350. When I interviewed for the job, price of oil was $55/barrel. I asked him what would happen if oil hit $80-90/barrel, he said - not a thing, it's the cost of doing business.

Well, oil hit almost $100/barrel. He sold his King Air 350, and bought a brand new Hawker 900XP.

People worth that money simply don't care what it costs - they don't want security lines, they don't want to be poked by TSA, they don't want to take their shoes off, they don't want bitchy flight attendants, they don't want to fly sandwiched on some regional jet, they don't want to sit next to smelly NASCAR fans on SWA or Skybus, or some brat kicking their seat all the time without the parent doing a thing about it, and they're willing to pay for it.

 

[GSXR600]

How does $100 barrels of oil affect the fractionals vs. the airlines. I know you guys pass some of the cost onto owners but will that discourage them too? Lets face it, oil prices are going to keep climbing with global industrialization and such. I'd like to figure out if this could be good or bad for those of us considering jumping from 121 jobs to fractionals. Thanks in advance.

You have to remember that this is not the kind of people that go on travelocity.com and look for the cheapest fare........if the can afford a share of a 20 million dollar airplane, I think a fuel increase will not be a problem....they need to get where they need to get regardless of what the cost is!!.....soo to answer your question NO it should not be a problem.

 

[Buckeye]

Warning

FREIGHT DOG THIS IS YOUR ONE AND ONLY WARNING....LEAVE US NASCAR FANS ALONE!!!!

WE ARE TO BUSY :beer: TO WORRY ABOUT PERSONAL HYGEINE :laugh: .

 

[RNObased]

I heard the CEO of CS say, with my own ears, that price was not the concern, but availability was.

And how was he concerned with availability??? Or did he say??

 

[208starcheck]

If gas was $100 a barrel, would you stop driving?

 

[Crow]

I am no expert, but don't the fractionals still get hit on the repositioning flights that they have to pay for????

Fractionals don't get hit, the owners do. The fractional owner pays more per occupied hour than does the straight out 91 owner. Its a built in, cover the ferry legs fee.

 

[Sparse]

And how was he concerned with availability??? Or did he say??

I think his concern was if fuel prices climbed high due to la shortage of fuel. The lack of fuel part was what concened him. You know distribution to the field, i.e. smaller airports, etc.

 

[gunfyter]

At some point a price high enough would trash the economy... that affects everyone... even the fracs.

Doesn't look good when the G-V comes to pick up the CEO who just laid off 10,000 workers and the stockholders are looking at negative returns.

 

[RTRHD]

At some point a price high enough would trash the economy... that affects everyone... even the fracs.

Doesn't look good when the G-V comes to pick up the CEO who just laid off 10,000 workers and the stockholders are looking at negative returns.

Or a Falcon:bawling:

 

[RNObased]

I think his concern was if fuel prices climbed high due to la shortage of fuel. The lack of fuel part was what concened him. You know distribution to the field, i.e. smaller airports, etc.

Oh, I see. I don't think it is a valid concern for a long, long time. People love to run around screaming we are out of oil. That isn't quite the truth. Now are we out running out of oil that is easy to get to, and thus cheaper to bring to market, Yes.

 

[gunfyter]

Or a Falcon:bawling:

Yes, any jet really.

But LOW oil prices fuel an economy with massive growth... basically what happened since Reaganomics continued through Bush, Clinton, and W administrations until now.

Low oil prices low inflation low interest rates... booming economy.

makes more rich people and more frac jobs... with bigger planes and higher pay

High oil prices is not good for us.

 

[RCA]

At some point a price high enough would trash the economy... that affects everyone... even the fracs.

Doesn't look good when the G-V comes to pick up the CEO who just laid off 10,000 workers and the stockholders are looking at negative returns.

American Airlines CEO defends executive bonuses
DALLAS (AP) — Bonuses for about 1,000 executives at American Airlines could be worth more than $70 million at the parent company's current stock price, and the airline's chief executive publicly defended the payments, which drew howls of protest from union leaders this month.
Executives with parent AMR still declined to put a dollar figure on the payments, but they said Wednesday that there are 2.2 million bonus units, valued much like shares of stock.
Each unit will be multiplied by 175% and then multiplied again by the stock price. The 175% multiplier will be used because AMR's stock rose more than other U.S. airline stocks from 2003 through the end of 2005.
On Wednesday, AMR shares closed at $18.71, and the average of high and low prices was $19.32. At that level, Executive Vice President Daniel P. Garton's 44,000 units would be worth more than $1.5 million, and three other executives would get more than $1 million. The smallest payments, 50 units, would be about $1,700.
Those amounts have declined since the issue erupted into a major controversy at the Fort Worth-based carrier early this month because AMR's stock price has slipped, making each unit less valuable.
Chairman and Chief Executive Gerard Arpey, who did not take part in the current bonus program, said Wednesday that the payments are part of executives' compensation and are designed to base part of their pay on AMR's performance. He said that since 2001, those employees "have seen a substantial reduction in overall compensation" because stock-based payouts were low.
"The payments are much higher (this year) because our stock is much higher," Arpey said.
The payouts — company officials don't use the term "bonuses" — bloomed into a controversy early this month when the size of the largest payouts became apparent. They protested that the bonuses were poorly timed because AMR has lost more than $7 billion since the start of 2001.
Members of American's three unions narrowly approved $1.6 billion in annual pay cuts and other concessions in 2003, when the company was on the brink of bankruptcy. As part of the deal, the company gave them stock options that AMR estimated this month to be worth more than $568 million when they vest in April.
Officials for the unions did not immediately return calls for comment on Wednesday.

 

[gump88]

FREIGHT DOG THIS IS YOUR ONE AND ONLY WARNING....LEAVE US NASCAR FANS ALONE!!!!

WE ARE TO BUSY :beer: TO WORRY ABOUT PERSONAL HYGEINE :laugh: .

I was thinking the same thing!!!! )

 

[blueridge71]

There is no overcapacity in the fractional industry like there is in the airlines and the fractionals do not compete on price.

Fuel is a small percentage of the cost of fractional ownership and if you are worried about small change, you probably aren't going to own a share of a private jet in the first place.