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Nearly all the major airlines have announced cutbacks in their flying schedules with many grounding their older less-efficient aircraft and dropping service to smaller cities. Fare increases, baggage charges and fuel surcharges are becoming the norm. Cheap fares and frequent flyer seats are becoming more difficult to obtain.

The problem is compounded by EC emissions regulation rules that the industry claims will cost $10 billion to comply with. Recent attempts at airline mergers in the US failed because labor contracts would hamper efficient integration of separate systems.

The pace at which the industry’s problems are compounding suggests that a day of reckoning is at hand. If oil prices continue to rise at a time of economic stagnation, mass discretionary air travel will soon be priced out of the market and the industry will shrink to a fraction of its current size. Re-regulation of the industry seems likely within in the next few years in order to insure a minimum of essential flights between major hubs remain available.

5. Energy Briefs

(clips from recent Peak Oil News dailies are indicated by date and item #)

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Saudi Arabia's Shura council (parliament) will hold a series of meetings over the next two weeks to discuss a controversial proposal by a key member to curb oil production to save reserves for better prices. (6/5, #4)

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An explosion in Western Australia at Apache Energy’s natural gas processing facility has cut the state’s gas supply by a third. It could take months to repair. The gas shortage is seriously impacting the resource industry, with companies having to cut back on production and having to buy more diesel for power generators. (6/7, #8)

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GM announced drastic cuts in production of sport utility vehicles and pickups and stepped up plans for building smaller cars. CEO Wagoner said GM will close four North American assembly plants by 2010. And in a humbling admission that the SUV era is all but over, GM said it is considering selling the gas-guzzling Hummer brand. (6/4, #14)

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