Oil Fears Motivate U.S. Airlines to Write "Open letter to All Airline Customers"
If any of the major U.S. airlines have your email address in their databases, there's a good chance you recently received a letter asking you to help them fight "thousands of lost jobs and severe reductions in air service" due to "ultra-expensive fuel."
Signed by the CEOs of twelve major U.S. airlines, the letter blames out-of-control futures market speculation for playing a large role in the rapid increase of oil prices. According to the letter, "Today, oil speculators purchase 66 percent of all oil futures contracts.... A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs."
According to CNNMoney.com, "Even Southwest Airlines signed the letter. Though most airlines weren't as lucky, Southwest hedged 70% of its fuel costs at $51 a barrel. As a result of its smart bets in futures markets, the discount airline is paying only about $2 a gallon for its jet fuel."
There is no shortage of controversy over this latest plea by the airlines. Travel news and commentary site Tripso.com, in a somewhat cynical interpretation of the letter, claims that what the airlines are actually saying is, "We’re asking the government and you, the taxpayer, to help us. But we pray to God that no one sees the extreme irony of an industry that has resisted any kind of government regulation and has taken its customers for granted, asking for help."
Whether or not this effort to reduce fuel prices will succeed may itself be open to speculation, but one thing that remains as clear as ultra-purified premium gasoline is this: the airlines are worried about their futures. The greatest irony in this story may be that an industry not widely known for its customer-centric orientation now appears to have been thrust into a situation in which it must appeal to the very customers it has frustrated for so many years. One can only hope, for the airlines' sake, that those customers are willing to show more compassion for the airlines than the airlines may have shown for them.
The full text of the letter can be viewed here.
(Adobe Reader required to view letter)