Fuel Price effect on 50 seater jet and its viability

ScorpioStinger

Well-Known Member
I know my questions are complicated, but there are plenty of smart guys on JC.com who could help me better understand fuel price, fuel hedging, and the viability of 50 seater jets in our current economic realities.

Background:

Current oil prices are expected to stay between $60-$80 a barrel for the next few month, i've read many saying about a year, that its not a short term move by OPEC. This is due to current world economic conditons. Due to Saudi/OPEC flooding market (increasing supply = cheaper oil) into next spring or summer. Or at least until a few small-midsize U.S Oil E&P corporations that have been ramping up production with billions of borrowed cash start to bubble/collapse).

Correlation to Aviation:

I've heard so much about 50 seaters being gas guzzlers, I've heard mixed stories of how unprofitable they were, they are, and will be for the majors & regionals who purchased them. But this was when oil and jet fuel prices were at record high prices.


Questions:

At $60-$80 per barrel range for crude and lower jet fuel prices; won't this change, or slow down plans to park 50 seat jets?

Are the Majors now fuel hedging to lock in these low prices!? Or do the bigger regional jets (E175, CRJ700/900 etc) cost less to purchase than 50 seaters? What about operating cost in today's lower oil prices and jet fuel costs?

Won't income/profits differences be obsolete between for example the CRJ 200 and CRJ 700/900???? (Due to lower operational expenses from a 40% drop in oil prices, and thus jet fuel cost)

Any expected delay in parking the CRJ200/E145 and other 50 seat jets that had low margins and lower profitability in the past?

Seems like 3 Big Major Carriers are just moving these 50 seaters around the regional market to the lowest bidder.

Skywest ( plus XJT), is more diversified, than say AWAC. But is AWAC more likely to be obsolete along with 50 seaters when and if prices do go back up?
 
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How much do the 50 seaters cost the airline? It is more than just gas. What is the yearly lease cost of a 200 vs. a 900? The answer is MUCH more than you think.
 
We talked about this in 2006 or 2007, right? My JC Internet Wayback Machine is on the fritz.
At $150/per barrel talks, majors were hurting in bankruptcy figuring how to squeeze more out of there CRJ200 operators or shutting it down & giving the flying to lower bidders. Thats all i somewhat remember.

Prices were at record highs then. CRJ200 was labeled inefficient for many route structures.

Today at current low fuel prices & more effecient networks are they viable?

p.s. factoring in higher MX costs due to aircraft age of course.
 
Gas will go back up, no question. It may stay low for a little while, but part of OPEC's strategy is to lower prices to ultimately reduce the amount of domestic shale oil companies here in the U.S. With prices as low as they are projected to go, most US oil companies that base their profits off of fracking will not be sustainable. It's a long-term strategy that is having some short-term benefits.
 
What about scope? If these things can't fly for any carrier why talk about it? 50 seaters are being parked for more reasons than just being gas guzzlers.
 
Your perspective is limited to the last few years, so you consider $60/bbl oil to be low. It's not. When the CRJs were first rolling out and starting to find a market in short-haul and long, thin markets, oil was at $15/bbl. Pre-bankruptcy, the majors were starting to panic when oil hit $30/bbl. It's only in the post-bankruptcy world, after the airlines have completely restructured and shed pension obligations, that $60/bbl oil is profitable on even the small narrowbody fleets. It still isn't profitable on the small RJs. A 76 seat RJ may be breaking even or barely churning out a tiny profit on the best routes at these prices, and a 90 seater is doing okay. But a 50 seater is a still a dog. Oil really needs to be below $30/bbl with a reasonable crack spread in order to make the 50 seaters attractive. In other words, it'll never happen again.
 
in other words, it'll never happen again.

Good riddance to that POS little whipsaw machine. As far as I'm concerned the armada of RJs that darkened the sky post 9/11 set my career back by at least a decade.
 
Age 65 timing was an absolute travesty while thousands upon thousands of post 9/11 hostages were still on furlough. To this day I can't believe they did that.

Not to say retirement shouldn't have been raised to 65, but not while so many were on the street...
 
Age 65 timing was an absolute travesty while thousands upon thousands of post 9/11 hostages were still on furlough. To this day I can't believe they did that.

Not to say retirement shouldn't have been raised to 65, but not while so many were on the street...

And the economy tanked too.

Don't feel too bad for yourself. You stayed employed while some of us were forced into finishing school.
 
If you don't like RJ's, then keep your scope clause!

I'm not real jazzed about the Ejet either. We had airplanes that held 65-100 seats back when I started flying too.

They were called, Bac 1-11, Fokker 28, Fokker 100, DC9-10, BAe 146... And they were all mainline metal flown by mainline pilots.

So when I see an E170 taxi by, all I see is a DC9 parked somewhere in Arizona, it's associated mainline jobs lost forever.
 
Mainline guys accepting 90 seaters was one of those "dance with the devil," damned if i do and damned if I don't accept this sweet deal.... right? Mainline guys had their hands tied.
 
Mainline guys accepting 90 seaters was one of those "dance with the devil," damned if i do and damned if I don't accept this sweet deal.... right? Mainline guys had their hands tied.

True. The real error came early in the game when the 50 seaters were traded for bigger pay raises. If those were never given up, then management wouldn't have had luck in bankruptcy court getting the bigger airplanes.

But hindsight is 20/20. It's easy to condemn the mainline pilots of the early '90s now that we can see the aftermath in our rearview mirror. It's not so easy to see it ahead of time.
 
Where are all of these paid off CRJs?
I'm speaking hypotheticaly, but you bring up a good point. Mesa was supposedly launch customer for the CRJ and most (all?) are still not paid off. That was the whole point of the go! debacle -- flying in Hawaii was supposed to lose less money than parking them.
 
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