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When fuel is so cheap that the capital expenditure is not worth the cost of the new jet.

BitwiseFool 5y ago
True, and I'm no expert in planning but here's my thinking. Fuel can only get so cheap, but there's no limit to how expensive it can get. So while the capital expenditure will be high, the odds of fuel getting much more expensive down-the-line is almost certain, no?
- MattGaiser 5y ago
  > the odds of fuel getting much more expensive down-the-line is almost certain, no? Not really. Jet fuel prices peaked in 2008, without adjusting for inflation. [0] So fuel consumption has been a lot less important over the past few years. It is also questionable whether carbon taxes will be placed on jet fuel in many cases. At least in Canada it tends to be exempt. [0] https://transportgeography.org/contents/chapter5/air-transport/jet-fuel-prices/ https://transportgeography.org/contents/chapter5/air-transpo...
- FredPret 5y ago
  Correct, but there’s another cycle on top of this - resource production. More expensive fuel, more intensive oil exploration and refinement. Make oil expensive enough and Shell et al will find hydrocarbons offworld if need be.
mikepurvis 5y ago
I think the point is that eventually you have to buy a new one regardless, so regulations ensure that whenever that time comes, whatever you buy (if it's new anyway) hits some baseline of efficiency. This sort of thing is the logic behind CAFE [1] for automotive, anyway— it forces all the manufacturers to hit a certain baseline efficiency rather than relying on them to all just be slightly less bad than the other guy (or to ignore efficiency altogether and make up the difference in performance/features/marketing). [1]: https://en.wikipedia.org/wiki/Corporate_average_fuel_economy https://en.wikipedia.org/wiki/Corporate_average_fuel_economy
- MattGaiser 5y ago
  The problem for Boeing is when the buying of new ones happens. If it is in 10 years, then they want to invest in this new plane. If everyone starts being like Delta and flying lots of old aircraft, then they want to wait for the new jets.
frankfrankfrank 5y ago
Also worth mentioning is that certain airframes can be updated with new more efficient engines.

True, and I'm no expert in planning but here's my thinking. Fuel can only get so cheap, but there's no limit to how expensive it can get. So while the capital expenditure will be high, the odds of fuel getting much more expensive down-the-line is almost certain, no?

MattGaiser 5y ago
> the odds of fuel getting much more expensive down-the-line is almost certain, no? Not really. Jet fuel prices peaked in 2008, without adjusting for inflation. [0] So fuel consumption has been a lot less important over the past few years. It is also questionable whether carbon taxes will be placed on jet fuel in many cases. At least in Canada it tends to be exempt. [0] https://transportgeography.org/contents/chapter5/air-transport/jet-fuel-prices/ https://transportgeography.org/contents/chapter5/air-transpo...
FredPret 5y ago
Correct, but there’s another cycle on top of this - resource production. More expensive fuel, more intensive oil exploration and refinement. Make oil expensive enough and Shell et al will find hydrocarbons offworld if need be.

mikepurvis 5y ago

I think the point is that eventually you have to buy a new one regardless, so regulations ensure that whenever that time comes, whatever you buy (if it's new anyway) hits some baseline of efficiency. This sort of thing is the logic behind CAFE [1] for automotive, anyway— it forces all the manufacturers to hit a certain baseline efficiency rather than relying on them to all just be slightly less bad than the other guy (or to ignore efficiency altogether and make up the difference in performance/features/marketing). [1]: https://en.wikipedia.org/wiki/Corporate_average_fuel_economy https://en.wikipedia.org/wiki/Corporate_average_fuel_economy

MattGaiser 5y ago
The problem for Boeing is when the buying of new ones happens. If it is in 10 years, then they want to invest in this new plane. If everyone starts being like Delta and flying lots of old aircraft, then they want to wait for the new jets.

frankfrankfrank 5y ago

Also worth mentioning is that certain airframes can be updated with new more efficient engines.