From: Reuters
Published May 23, 2008 07:37 AM

Wasted fuel from U.S. flight delays costs billions

Flight delays could cost U.S. airlines more than $2 billion in wasted jet fuel this year, according to a congressional report released on Thursday.

The Joint Economic Committee study estimated that flight delays and congestion, especially in the New York region, are squeezing airlines at a time when the industry's financial condition is deteriorating rapidly due mainly to the unchecked cost of fuel.

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"The airline industry is drowning in red ink," said U.S. Sen. Charles Schumer, who introduced the report that more broadly found flight delays severely impact the economy.

Commercial aircraft burned an estimated 740 million gallons of excess jet fuel because of record flight delays in 2007, costing them $1.6 billion. The calculation assumes an average wholesale price of $2.15 per gallon.

If the industry's on-time performance this year is the same as last, then wasted fuel costs could exceed $2 billion, based on the sharply higher per-gallon price of jet fuel, said Schumer, a New York Democrat and chairman of the joint economic panel.

The committee analyzed flight times, fuel burn rates and aircraft type.

More than a quarter of flights operated by major U.S. airlines and their affiliates were delayed last year with on-time performance suffering most at New York-area airports. The New York region handles about a third of all domestic air traffic.

Bad weather and airline overscheduling is blamed for most delays. But Schumer and the industry say the aging air traffic control system managed by the Federal Aviation Administration (FAA) is the central problem.

Airlines are straining financially under jet fuel prices -- now approaching $3 per gallon -- that have tripled this decade and currently represent roughly half of operating costs.

A handful of small carriers have ceased operations in recent months, unable to attain financing to restructure in bankruptcy.

Although big airlines have adequate cash for the moment, Wall Street analysts say liquidity is threatened by unabated and sharp increases in fuel, and new bankruptcies are possible if capacity is not cut sharply.

"No one is exempt from the threat," James May, the industry's top lobbyist as chief executive of the Air Transport Association, told Reuters in an interview this week.

Schumer said the best thing for the airlines is for oil producers to boost output to lower prices. May agrees and said the Bush administration should release some U.S. oil reserves to ease price pressures.

May said the industry is not looking for specific help from Congress.

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