194. AIRLINES: CANARY IN THE COAL MINE
A common peak oiler argument is that airlines are the "canary in the coal mine":
In mining lore there is a story about miners placing a canary in the mineshaft to test the safety of its atmosphere. If the bird lives, the air's breathable and you're probably going to be ok. If the bird dies, get out quick. In today's world, the airline industry is that figurative canary in the mineshaft. For those wishing to know where the peak-oil crisis--as it pertains to the economy--will start, I think it is here.SourceThe theory is that airlines are more susceptible than other industries to high fuel prices, and we'll know we're in big trouble when the airlines begin to collapse.
Assuming that this is true, it's reassuring to see how healthy this "canary" is. This year has been a record-setting boom year for Boeing and Airbus:
If the airlines are on their death bed, why are they buying so many new planes?
Boeing may be on track to beat 1988 record for jet orders
SEATTLE (AP) — Boeing (BA) has booked 870 net jetliner orders so far this year, which the company says may put it on track to beat a record set in 1988.
Boeing and McDonnell Douglas, who have since merged, booked 877 net orders that year.
The aerospace company, which produces commercial airplanes in Seattle, said Thursday that it may win more orders before the end of the year. That could push its total over the 1988 figure.Source
Check out the chart for Boeing stock:
As you can see, that's hardly the chart of a dying industry. Higher oil prices have led to booming business for Boeing, not collapse. Part of the reason is the increased drive for fuel efficiency:
Overall, Boeing is on track to sell more airplanes than Airbus for the first time in five years, amid strong demand for both companies' offerings. Airlines have been especially keen on the 787 because it promises up to 20% more fuel efficiency than any model on the market today — a key selling point as many airlines struggle to make money amid high fuel prices.SourceThis is interesting because it runs counter to the doomer theory that higher fuel prices lead to economic ills and decline. In the case of the aircraft industry, higher fuel prices are stimulating business, and driving new growth.
-- by JD