Slowdown

[Schooner.Cdn]

And I was just about to find something tall to jump from .... thx Beast.

[seahawk]

Man I'm no economist but with a huge supply of pilots entering the market, having been laid off as a result of bankruptcy and mergers. Add that to a slowing economy, and hyper inflation in fuel prices, we are not in the best industry. Perhaps I'll be a repo man.

[wallypilot]

Also, though it is OIL that is traded on the stock exchange... the reason oil prices are as high as they are is because there is no new investment in oil refineries. This is partly due to the fact that countries are tightening control in regards to the environment, and also due to the fact that it makes more business sense to make $40 on a refined unit of fuel vs. $5. (I think the profit margin is actually substantially higher but I don't want to exaggerate either)

Actually, I would argue that the absence of investment in oil refineries has sent prices of gasoline and other refined products higher. Shouldn't directly affect the price of crude.

Anyways, I bet by 2010, we'll be looking at oil around a spot price of $200 per barrel for crude, and gasoline in the $2.00 - $2.50 per litre range in Canada. Estimated increase in oil production over the next few years is maybe a few million barrels per day. I think right now the world produces 86 million bpd, and it is only forecast to increase to 91 million bpd over the next 5 years. Demand is outstripping the growth in supply, and prices will continue to skyrocket, whether or not the troops pull out of Iraq. If anything, pulling out of iraq will send oil prices higher, as the security for oil production facilities will disappear, and the possibility of disruption to production or transport will make the market jittery. Companies that do well will have set up good hedging contracts. Right now oil for delivery a year from now is $100 per barrel. With the spot price to be in the $150 range, if you can get a contract now for next year at $100.....well, need I say more?

I think it is obvious that inflation will pick up in the next year, driving interest rates eventually higher (2009, I think) and spending will slow. However, for 2008, we can sit back, fat dumb and happy. For those on variable rate mortgages, start thinking about locking in those mortgage rates sometime around early 2009.

Watch for an economic slowdown in 2009 in Canada(not severe, but definitely a slow down), and make sure you're in a good seat before then. Watch for inflation to pick up, and make sure you're getting those cost of living increases so that you're not getting poorer!

How will all this affect the airline industry? Well, I think right now in Canada, passenger ticket prices are relatively high, despite high fuel prices, and load factors on the majors are at all time highs. So, I think the airlines have some flexibility to absorb higher fuel prices and other costs as demand weakens. However, it won't be enough to mitigate the eventual slowdown, and think profit margins will thin, but the airlines will remain solvent.

As for the feeders, and other small carriers, things will remain brisk for a couple more years. In the north, diamond and other mineral exploration will keep aviation busy. The oil patch in alberta will get over its little snit about the royalties issue and eventually investment will pick up, and its aviation industry will resume its growth. The only soft spot I see in the industry is for low timers (it will continue to be a long road to get that first flying spot, except for a few lucky college grads that go to Jazz) and those of us that will not relocate.

-Wallypilot the economist!

[C23flyer]

Anyways, I bet by 2010, we'll be looking at oil around a spot price of $200 per barrel for crude, and gasoline in the $2.00 - $2.50 per litre range in Canada. Estimated increase in oil production over the next few years is maybe a few million barrels per day. I think right now the world produces 86 million bpd, and it is only forecast to increase to 91 million bpd over the next 5 years. Demand is outstripping the growth in supply, and prices will continue to skyrocket, whether or not the troops pull out of Iraq. If anything, pulling out of iraq will send oil prices higher, as the security for oil production facilities will disappear, and the possibility of disruption to production or transport will make the market jittery. Companies that do well will have set up good hedging contracts. Right now oil for delivery a year from now is $100 per barrel. With the spot price to be in the $150 range, if you can get a contract now for next year at $100.....well, need I say more?

How about some sources there Wally boy. I heard the first bit of info ($200 by 2010 and $2/L) on Thursday or Friday on the radio.

[wallypilot]

Sources are just from various articles I have read, so it's total heresay. I could dig them up but am too lazy!....but the logic seemed solid. Part of my bullish feeling about oil is the fact that China's consumption of oil far outpaced what the experts thought would be the case. If I remember correctly, experts estimated china's increase in demand for oil would be in the 3% range, when in fact when the numbers came in, it was a 6-7% increase year over year from year end '06- to year en '07.

I am also very bullish on oil, since despite the price doubling in the last couple years, the general public's driving and consuming habits have changed very little. I think it's going to take 2.50 per litre gasoline to REALLY make people CHANGE their habits significantly. By significantly, I mean screaming out loud for more diesel vehicles in canada, and urbanites buying electric vehicles, etc. I know this is starting to happen a tiny bit, but it's a drop in the barrel compared to what really needs to happen.

Of course, all this is dependent on constant world economic growth. If we fall into a global recession anytime in the next few years, all bets are off.

[Kosiw]

Add to this the current dramatic rise in food prices across the globe, discrectionary spending will erode, people won't fly as much.....the music has stopped playing

[sprucemonkey]

And the price of flour has gone up from 4.99 to 11.99 for a 10kg bag. I've had to resort in spreading my peanut butter and jam on my tie instead of two slices of "smart" bread!!!

Sure looks bad for the near future

[longjon]

Or you could get a job with the boys that dig for this liquid gold.

It is tough being in a camp with them and they are earning 800 a day and you're only on 120 a yr.

[beast]

Geez, you guys - like i said in my first post, these recent problems are all associated one way or another with the serious issues in the American economy. The US has been declining in economic predominance since the 1970's, and will continue to do so, right now all we see are "the chickens coming home to roost"

The rest of the world, which used to live on the beck and call of the US, will now continue on their way - flying around the globe must increase, by default, as it is now a commodity of the international community - the only alternative is the entire globe going back to the stone age.
Air travel, especially international, is now a necessary part of the world "society" - Pretending that higher costs will forever harm the industry is like suggesting that "because windows vista really sucked, and was expensive, one day, people all over the world just stopped using computers"

Whether the American market will ever return to a healthy state, who knows - there will ALWAYS be a pilot shortage on this planet, just like there will ALWAYS be a shortage of highly trained professionals in any field.

More and more, foreign airlines will increasingly employ North Americans, based in North American cities. Lower wages and decreased demand for pilots domestically have already stimulated this. Remember, North America is the only place on Earth that actually produces civil pilots -

I'm willing to project that in 15-20 years, over 40% of all airline pilots living in North America will be employed by overseas carriers, such as Cathay, Emirates, JAL, ANA, etc. The wages and job security will be there, and this will foster likewise in the domestic operations.

Once again, i've gone over my 2 cents - flame away, but make sure you come back on this forum in 15 years, then you'll see

[seahawk]

Beast, you refer to pilots as highly trained professionals. Delusions of grandeur. A lawyer, Doctor, engineer are highly trained professionals. Anywhere from 6 to 12 years of full time post secondary and internships. Pilot: part time study with some motor skills. Essentially a well trained monkey.

The other problem is that pilots are trained, not educated as your last post so clearly illustrated. Oil supplies are diminishing, demand is exploding. Aviation is a dying industry. You're the violinist on the deck. Your statement that there wil always be a shortage of pilots or even highly trained pilots is retarded and people in our industry need to get real and stop deluding ourselves with our sense of self importance

[Cat Driver]

Beast, you refer to pilots as highly trained professionals. Delusions of grandeur. A lawyer, Doctor, engineer are highly trained professionals. Anywhere from 6 to 12 years of full time post secondary and internships. Pilot: part time study with some motor skills. Essentially a well trained monkey.

Judging by the level of experience the schools are accepting for instructors these days do they even turn out the equivalent of a well trained monkey?

[Wacko]

Beast, you refer to pilots as highly trained professionals. Delusions of grandeur. A lawyer, Doctor, engineer are highly trained professionals. Anywhere from 6 to 12 years of full time post secondary and internships. Pilot: part time study with some motor skills. Essentially a well trained monkey.

Judging by the level of experience the schools are accepting for instructors these days do they even turn out the equivalent of a well trained monkey?

Speaking for myself... YES... I believe I am a well trained monkey! erm... or at least top 10!

..... sigh..... back to my $2/hour flying job.... I'm glad I've been put in my place


Actually........ how many lawyers have YOU seen orbiting the earth.. huh! huh! huh! WOOT SPACE MONKEY!

[bombardierfixer]

Well trained monkey's are smart enough to avoid aviation as a whole...Could be worse, you could be involved with giant RV's no there's a growth market!!! Don't worry ethanol will save us, because burning food is a good idea.

[Wacko]

Amen!

[skywire]

Problem is if we burn up all the food, people starve, we need an engine that runs on 1-part food to 1 part ground up orphans, then the supply and demand for food will balance out in the end.

[short bus]

soylent green??

[pitot]

I heard on the radio the other day that some guy from the U.S somehow has been able to create 4 gallons of crude out of 1 days worth of pig sh*t from 1 pig. Now that would be great to refine that technology. Far superior to ethonal. Now not only would you have bacon, you could also have gas for your car. I'm sure that is far better for the enviroment than what is taking place now on hog farms.

[beast]

seahawk - You consider doctors, lawyers and engineers highly trained professionals, but not airline pilots?

Airline pilots, as a whole, must in the line of their work demonstrate a standard of professionalism and skill that is unmatched by any of the aforementioned professions. Believe me, I have both friends and relatives that are doctors, lawyers, engineers..you name it. I understand what their careers entail, and what their training involved.

There was an article in Wings magazine recently, written by a surgeon, who was undergoing flight training. He had been so impressed by the caliber of his PPL training that he was redesigning training programs at his hospital, and attempting to have them changed elsewhere.

He mentioned public statistics, such as the fact that over 10,000 surgical implements are left INSIDE North American patients after their surgery every year. He compared that, quite correctly, to the equivalent of 10,000 jets landing every year with their gear up.

Failure is not an option for an airline pilot - It means death! Every day on the news we hear of nothing but constant f**k ups from doctors, laywers, and oh, whats the other one ....right, engineers.

This is generally reflected in the compensation of airline pilots - in last years Forbes list of the highest paid jobs in North America, airline pilot ranked in at number 11 - right after 9 types of surgeons, and CEOs. They beat out lawyers, general practice doctors, and engineers. And you know what? Air Canada and Westjet both pay more than virtually all American carriers - so for all the bitching on this forum, this industry doesn't seem to pan out so poorly.

The average North American airline pilot has had two years of basic training, a 4 year bachelors degree, and anywhere from 5-10 years experience in smaller aircraft.

Thats a little easier than drinking your face off for 7 years while daddy pays for med school. Believe me, if you think that lawyers are true professionals, and Air Canada pilots are bunch of illiterate monkeys, guess who's the moron? Its you.

I have nothing more to say to you people, other than I am glad I probably won't have to share a flightdeck with any of you, because you'll be so busy ranting about how your life sucks on this forum.

[beast]

Oh, one more thing -If you don't think that learning how to fly a 737 is education - I...I don't even know what to say to that.

[Cat Driver]

beast, I have been flying for a long time.

Going from one airplane to another was no more than getting trained and checked on type......can't really recall any of them that were all that difficult to fly properly.

Conversely my doctor has to know a whole lot more about how to keep me healthy and cure me when something goes wrong than I had to learn to drive an airplane....

So if being a pilot requires so much education how in hell did someone like me who has very little education ( Grade 8 ) make it through the flying game?

[beast]

Cat, every time that you go engage in a training activity, you are educating yourself - Do not allow yourself to fall for the pretentious bullshit - that education only consists of sitting in a classroom, having some heavily overpaid drone rant away at you for hours on end

- Education is a huge part of aviation -as an experienced aviator, you are an extremely educated person in your field, like a doctor is in his field - Just because much of your education is informal does not discount it.

And if you think about it - Just think of absolutely everything you know, and have to know, every time you go flying. It may be utilized subconciously, but you are calling upon a huge knowledge base that you have developed over the years.

Flying aircraft is quite unique among skill sets however - As every instructor should tell every student, flying aircraft is a lifelong learning experience - you will never know it all, like a surgeon will never know absolutely everything about human construction and function.

Unlike other professions however, if you're descending into vancouver airport in the middle of the night in a driving blizzard with a feathered engine and icy runway - You can't go "I'm referring this approach to a specialist, thanks anyway, folks"

So, although you may not consider yourself to be, or the school board may not consider you to be, you are in fact, a very highly educated, technically skilled professional, and should be paid as one.

Unfortunately, there are people in this industry like seahawk, who seems to devalue his own abilities (or maybe he isn't) who set the compensation bar lower for all of us. He thinks that a monkey can fly a jet aircraft proficiently, safely, and consistently, so if someone offers him $10,000/year to do it, he'll jump on it, because why not? A monkey could take the job instead.

[Cat Driver]

Very good post beast, you have put it in a good perspective.

As to pay I'm retired now but when I was working I got paid very well in fact at the very top end of the pay scale.

Now to go a step further with this aviation skills and knowledge subject, I was both a pilot and a mechanic for all of my career and the mechanic end of it required far more knowledge and was far harder work than driving the things.

One more little factoid....

A Grumman Goose is far more demanding to fly in its environment than a modern computerized jet.

[seahawk]

I have to say Beast that all your protesting suggests that you have a great deal of insecurity with regard to your lack of education.

In addition by using your criteria of pay as an indicator of professionalism the average 18 year old high school drop out rig pig is a highly paid professional

As far as your idea that if a pilot makes a mistake its game over. Bull. We all know that pilots make mistakes frequently with no consequences other than a sideways glance from the person riding next to us.

We are not that important. As an AME as well as pilot, I can say with a great deal of confidence that fixin is harder than flyin them.

[jetflightinstructor]

*

[C23flyer]

I'm an educator and unfortunately this sector is characterized by a lack of professionalism and an abundance of ignorance. Parents are trusting teachers to prepare their children for the future but in truth, many teachers are ill-prepared themselves for the technology that is here now, let alone what kids will be exposed to in the next ten years. A professional teacher would be more concerned about this reality and planning for it, than with preparing students for some high stakes test of literacy.

Education is not an indicator of ability or professionalism. Ability stems from training and god-given talent, while professionalism is a personal choice an individual makes every day. Even the Ministry of Education in Ontario distinguishes between Education and Training. Well-trained is not well-educated.

So, IMO, there are pilots with high hours who are both professional in their jobs (unlike the pilots in the American beer thread), and well-trained. I'm guessing there are a couple of those high hour pilots who are just lucky. As for salaries for said pilots, the market will bear that out. If they are in demand, they will command a higher salary.