Wednesday, April 09, 2008


American Airlines has grounded another 850 flights for wheel well wiring inspections. When life is tough, it seems like there is piling on.

The Apostle Paul wrote, ..."we also rejoice in our sufferings, because we know that suffering produces perseverance; perseverance character; and character, hope. And hope does not disappoint us, because God has poured out his love into our hearts by the Holy Spirit, whom he has given us."

The employees and owners of airlines have been put to the test over the past 30 years. Life has been good for the great majority of all parties but the troubles in the business have not been mild, to say the least. Many an old name, such as PanAm and TWA have passed away. Life is tough but I still have hope.

My friends have grown tired of my rants about new fuel supply coming on line. This too, the fact that few believe it will happen, is a sign that the new supply will come to pass. The belief that the price of oil will only go higher is the foundation of the reactions that will make the price go down. For example, there is currently a "gas rush" in British Columbia. In the past year, the providence has collected right at One Billion Dollars in land use contracts. This is a record for the providence. The reason companies have paid a cumulative total of one billion dollars for the right to drill is because they believe the investment will pay off. The irony is that back when oil was cheap, companies routinely flared off the natural gas as a nuisance. Today, the world wide growth in liquid transportation fuel is coming largely from natural gas. The industry has know about many super large gas fields for many years. For example, the Bakken field was discovered in 1952. Only recently have the drillers tapped into this field. Prices above $50 per barrel make drilling for gas in this huge field (it covers the greater part of two US states and one Canadian providence), very profitable.

By the same token, people are finally avoiding the purchase of SUVs while the sale of fuel efficient vehicles is soaring. The high price of fuel is part and parcel to the ushering-in of a golden age for airlines. Mass transit makes the most sense when the price or convenience of individual transportation goes up. If the economic growth of China, India and other developing nations is going to continue to soak up the growth in resource production, in this "new economy", Americans will own small, urban vehicles and then rely on mass transit for long haul trips.


A line in "The Greatest Salesman" is, "I will persist, I will succeed". I believe it was Vince Lombardy who said that when the going gets tough the tough get going. Paul led us down the path of perseverance, character and hope. The disruption of 850 flights is a big deal in the short run. After 30 years of the adjustments required to undo the harm done by the government regulation of industry, the airline market has been rationalized. Safety is must come first. The MD-80 aircraft being inspected are very old. The industry must turn profits in order to modernize fleets. The table is set for several feasting years.