Odd Lots This Is What's Next for the Future of Air Travel
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May 5, 2022 Scott Keyes, founder of Scott's Cheap Flights, sheds light on the evolving landscape of air travel post-pandemic. He discusses the surge in leisure travel and the growing challenges airlines face, including pilot shortages and rising fuel costs. Keyes highlights the shift from business to leisure travel, changes in pricing strategies, and the complexities of airfare variability. He also offers insights into how airlines are diversifying their revenue streams while navigating new customer demands and international travel restrictions.
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Austin Airport's Fuel Shortage
- Austin's airport faced jet fuel shortages due to rapid expansion and lack of direct pipeline connection.
- Airlines resorted to tankering, carrying extra fuel, to mitigate the issue.
Airline Hedging Strategies
- Most US airlines stopped hedging jet fuel after losses in the 2008 crisis, relying on spot prices.
- European airlines continue hedging, resulting in cheaper transatlantic fares.
Airfare Volatility
- Airfares are highly volatile due to seats being rival goods, spoilage, and unpredictable demand.
- Airlines must predict demand far in advance, similar to buying futures contracts.