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$200 Oil Is Coming While We Waste a Perfectly Good Crisis (Part 3)

In the 1960s I went to college at Louisiana State University. There I took geology as one of my sciences. This freshman course was taught by senior professor Henry Russel, the founder of the LSU geology program. He was at the time a power in state mineral policy. One day, to a large class of indifferent students, me included, he made an amazing statement: "There are so many wonderfuI things you can do with oil it's a shame to burn it in those high-compression cars you're so proud of." At the time (1967) gasoline in inflation-adjusted terms was more expensive than it is now. The national energy policy was as Dr. Russell described: To burn it as fast as we could with no thought for the future. This is still in a large measure US energy policy.

Express Luggage Services: Charting a Demand Curve With No Data

Victor, looks like at least one firm has taken your demand projection at face value. At the bottom of your seekingalpha.com page is an ad for the firm The Luggage Club, which promises the shipping of luggage to 220 countries. Those interested can click on the ad or go to www.theluggageclub.com...

Delta/Northwest: Evaluating Company Performance in a Dysfunctional Industry

Things are no better in the Canadian airline market. In 1987 the Canadian market was opened to what was termed “free competition.” Since then, the industry has been beset with what one commentator describes as financial crisis, dislocation, and potential safety hazards. Yet Ottawa has proposed further liberalization in markets, including enhanced deregulation and greater privatization.

One new airline, Roots Air, was in business for just six weeks. Another, Jetsgo, lasted two-and-one-half years. From 1987 to 2005, In the same period, Canadian Airlines, Wardair, Greyhound Air, Royal Air, Canada 3000, Vistajet, Intair, Quebec Air, City Express all flew and landed forever. Canadian airlines have now lost more money than they have made since the first powered flight in Canada in 1909. Consumers have seen benefits in the form of some low fares. Overall, however, the cost of flying, which includes new taxes and user fees, has grown since 1992 by 100 percent. This is four times as fast as average consumer prices have risen.

Increased competition has proved to be at best a mixed blessing for Canadian airlines. The interaction of easy entry for new start-ups and the hunger for large profits for those firms able to achieve a critical mass of destinations and passengers has rendered the Canadian airline industry into a scrap yard

These CEO quotes add spice to the mix:

"I've maintained for a long time that Canada is only large enough to sustain two significant carriers." Clive Beddoe, CEO of WestJet, March 12, 2005. When WestJet started operations in 1996, there were at least 5 airlines larger than itself servicing the Canadian domestic market. Now that he runs the second-largest airline in Canada, Beddoe figures it's time to close the doors to the party.

"You can't produce something for a buck and sell it for 75 cents, day in and day out." Michel Leblanc, CEO of 4 defunct airlines (Intair, Royal, Canada3000, and most recently Jetsgo), commenting on Air Canada's financial difficulties, April 2003.

"We have a cost structure to be effective, profitable competition." Michel Leblanc, launch of Jetsgo, June 2002.

"I do not have the same command of the U.S. market as I did of the Canadian market." Angus Kinnear, who piloted Canada3000 into bankruptcy in November 2001, then moved to Pennsylvania to start a new airline ingeniously called USA3000. Amazingly, USA3000 is still in business, so perhaps it's a good thing Kinnear's U.S. experience was so limited.

"The industry is always in the grip of its dumbest competitors." Robert Crandall, former CEO of American Airlines, 1992.

"How do you become a millionaire? Become a billionaire, then buy an airline." Richard Branson, CEO of Virgin Airlines.

"Recession is when you tighten your belt. Depression is when you have no belt to tighten. When you have no trousers, you are in the airline business." Adam Thompson, former CEO of British Caledonian Airways. (Stanford, 2005).


Stanford, J. In the Ditch Again. No.97. (2005, March 14). Facts from the fringe. Retrieved March 12, 2008, from www.caw.ca/news/factsf...