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California Heading for Catastrophe With Airlines While Ignoring High Speed Rail

Robert-Cruickshank.gifBy Robert Cruickshank
California High Speed Rail Blog

While the state media and the State Senate stick their fingers in their ears, cover their eyes, and ignore the reality around them actual business observers are sounding the alarm about the growing crisis in the airline industry. Via the Dallas Morning News comes a Business Travel Coalition report examining the "catastrophe" that the airlines are headed for - and their belief that a "national energy policy" is needed to deal with the looming disaster:

“As a consequence of the skyrocketing price of oil, the U.S. commercial aviation industry is in full-blown crisis and heading toward a catastrophe.

“In the hopes of bringing attention to the magnitude of the oil crises, Business Travel Coalition (BTC) commissioned AirlineForecasts, LLC to provide an analysis of what oil at several different price points means in terms of lost airline jobs, reduced seat capacity and increased fare levels.

“AirlineForecasts concludes that if oil prices stay anywhere near $130/barrel, all major legacy airlines will be in default on various debt covenants by the end of 2008 or early 2009. The implication is that several large and small airlines will ultimately end up in bankruptcy, and of those, some will be forced to liquidate.”

While economic theory suggests higher and unsustainable fuels costs will lead to a smaller industry, it does not necessarily follow that the industry will reach its smaller size before collapsing along the way under the weight of higher fuel prices.

In other words, high oil prices are going to cause higher fares on fewer flights on fewer airlines. Not exactly a ringing endorsement - and as we know that fuel costs are going to remain high for the foreseeable future, this problem is only going to get worse - as the report recognizes:

“The U.S. airlines, and those who depend upon them, are watching with growing alarm as their cash reserves fall precipitously toward zero as the price of oil, already at unsustainable levels, continuously spikes into uncharted territory. These airlines and their stakeholders have never faced a darker future.”

I don't see how the state media and the State Senate can continue to ignore this crisis. Neither group has paid any attention whatsoever to the issue. The media continues to prattle on about "financial risk" with the HSR bonds whereas the true risk lies with doing nothing as the airline industry collapses. And the State Senate, which could not be bothered to even mention the airline crisis or the oil price issue, is equally ostrich-like in its approach to HSR and the overall transportation environment in California. The BTC, which knows much more about that transportation environment, is not so sanguine:

“The consequences of the hole this will leave in our nation's transportation grid will be extremely profound for our economy, society and culture.

“A catastrophic result for U.S. airlines can be averted if policymakers, particularly in the White House and Congress, step up purposefully to address this monumental challenge. There is still time to make a difference. This is important not only for airlines and their passengers, but also for every business that uses oil products."

The BTC did not provide specific suggestions aside from calling for a "national energy policy" and Congressional action to stabilize the airlines. My guess is they'd like another bailout. Subsidies are OK for airlines even though their basic business model is collapsing but god forbid we spend some money on a proven travel system that takes the burden off of airlines and provides sustainable travel that is independent of oil prices - HSR.

But at least the BTC is sounding the alarm. It's an alarm that is growing louder. Who in California will hear it?

Robert Cruickshank is a historian, activist, and teacher living in Monterey. He is a contributing editor at Calitics.com and works for the Courage Campaign, in addition to teaching political science at Monterey Peninsula College. Currently he is completing his Ph.D. dissertation in US history, on progressive politics in San Francisco in the 1960s and 1970s. A native Californian, he was raised in Orange County and educated at UC Berkeley. This article originally appeared on the California High Speed Rail Blog http://cahsr.blogspot.com/ which he publishes.

Posted on June 15, 2008

Comments

Commissar Cruickshank,

Just WHO is sticking their heads in the sand on HSR today?

The State's HSR authority has spent nearly $60 million dollars over the past 10 years and has NO AGREEMENT with a major part of their existing proposal, the shared use of the Union Pacific Railroads' right-of-way.

Just WHAT was the HSR authority doing all that time with all that taxpayer money?

So the blind will still lead the blind with a nearly $10 Billion with a "B" bond proposal on November's ballot to further go down the "track" to it's dead end, again all at taxpayer expense.

Pure capitalism will work itself out with the airlines: some will go away, some will be leaner, etc. Those that stay around will become stronger...

Your use of the airlines woes is using a national/international issue to bolster your personal approach (state/federal funded bordering on socialist)to HSR which is only within the state of California and specifically a Bay Area-LA Basin "perk". Very twisted approach to satisfy a relatively small, misguided and mismanaged concern here.

Posted by: Jay Gould at June 15, 2008 09:44 AM

Robert,
The HSR won't get built if approved. As Jay mentioned, they haven't even reached an agreement yet on the important things. Back in the days when fiscal sanity as practiced, they mapped out and reached agreements on the projects BEFORE ever working on the financing, and the bonds were done as a last thing after they knew how much it would cost and where they were going to obtain the money. They haven't done that in this case. They have no idea where the other $30 billion (best case scenario) is going to come from. But in the mean time, they're asking us to pass debt onto our grandkids when there's no likelihood they will get to see any benefit from this? Please, spare me. This bond wont' result in an HSR getting built, but it will result in an increase in the baby tax (debt). That's the worst combination

In the mean time, the $40 billion (best case scenario once again) could be used to build a lot of new lanes. Vehicle miles traveled has increased over 128% since 1977, yet how many lane miles have been built since? Only a 7% increase! That's what's caused a lot of pollution and more demand for gasoline. A gridlocked car creates twice the NOX contaminants and 6 TIMES the CO2 contaminants as a car at peak capacity.

And don't fall back on your sprawl argument. Sprawl's reason for occuring has nothing to do with freeways. It has to do with the fact that people don't want to live in dense urban cores. They want to lie in a place where a toilet flushing next door isn't right in their earhole. They want a little elbow room and privacy, and a backyard for their children to play in. And they're willing to endure the traffic in order to have that. We can either accommodate this and build more lanes, or we can remain stubborn with our "rails not roads" view and only see the problem worsen.

Rails have their place, and they have a greater place in our future. But this HSR bond is not the answer, and the idea that we should just stop expanding roads now is absurd and only worsens the problem. I know this may be a weird concept to you, but we don't live in a world where people can just give up their cars tomorrow and switch to rails.

Posted by: Ben at June 15, 2008 11:26 AM

An editorial written by columnist Bill McEwen in today's Fresno Bee points to HSR successes in Europe and Japan. High-speed rail systems there were not built at the expense of air and car travel. And isn't it, or shouldn't it be, more a matter of the right mix of all transportation options that moves us forward, giving us the greatest amount of flexibility and mobility (least amount of encumbrance) keeping in mind, when practicable and where warranted, done with the least amount of energy expended and producing the least amount of environmental damage?

I also feel Amtrak is valid as are commuter rail type operations and expanding these in certain corridors should be done where it makes sense to do so. It's no secret Interstate 15 between Los Angeles and Las Vegas is regularly plugged. So why would it be out of the question to restore Amtrak's "Desert Wind" service irrespective of whether or not the much discussed (and debated) maglev train of late between Disneyland and Vegas ever gets off the ground?

With respect to Amtrak and commuter rail ops, in practically every case, they are at the mercy of and share tracks with freight rail carriers.

As I see it, Amtrak and commuter rail operations should not be limited to shared track operations only. Viable alternative routes should be identified when possible to run passenger trains so that interference with freight train and other passenger train traffic doesn't factor into the equation. Any delays to Amtrak and other passenger train operations is a detriment and certainly does nothing to help make a case for increased usage when this occurs. The "Coast Starlight" running between Los Angeles and Seattle is but one example. It has earned itself a notorious reputation for being behind schedule (at times, hours behind schedule) and, from what I understand, it's mainly due to freight train (and to some extent passener train) interference and antiquated technology necessitating crew members to align and realign switch points manually to direct the movement of trains into and out of passing sidings. This is a time-consuming process. In my opinion, this is no way to run a passenger railroad - not in this country, anyway and not in this day and age. (It would be helpful if the antiquated technology aspect of which I refer is described in greater detail, but I'm not certain this is the correct venue for doing this. Nevertheless, it can and often does result in added delays on top of what might be considered expected).

At the same time I also approve of the building by Amtrak (or a state-supported Amtrak service such as is the case with the California Dept. of Transportation (Caltrans) Div. of Rail, namely, Amtrak "California") of double track on existing freight trackage where predominantly single track (with passing sidings that are strategically located), Centralized Traffic Control territory exists. Where this arrangement is in place, it helps (or should, anyway) streamline considerably the operations of both the host and tenant that run trains on said track and should be done where feasible. A specific case in point is the section of double track that was installed recently on the Burlington Northern Santa Fe in southwest Fresno from the east end of Calwa Yard (BNSF's main Fresno Yard) extending 10 miles to Bowles. In this section there is bi-directional CTC train movement operation which means trains can operate in either direction on both tracks. This arrangement has made operations on this 10-mile stretch of double track much more fluid. Incremental solutions such as these has no doubt helped improve operations for both the freight as well as the passenger railroad operators in question - in this case Amtrak "California's" San Joaquins.

Highways meanwhile, are likewise being expanded and extended where needed. In Fresno, State Route 180 is being extended east, east of Clovis Ave. and extended west, west of Hughes Ave. This is Fresno's only major east-west freeway corridor. At the same time, the San Joaquin Valley Railroad has recently been given Surface Transportation Board authority to abandon about 30 miles of track in Tulare County. The county is fighting to save this section of track hoping it can buy it from the railroad as a way to preserve the line for future freight and passenger use, according to what I read. At a time when gasoline prices are skyrocketing, all efforts to expand rail capacity should be encouraged. Where Amtrak can't satisfactorily meet the travel needs of all travelers and where train travel is still a viable mode, I see this as a perfect situation where high-speed rail could be a viable alternative, and where it is, it should be advanced. But at the same time, if instituted, California HSR needs to be done right, especially if it is to be a model for other similar projects proposed and/or under consideration and discussion elsewhere.

Posted by: Alan Kandel at June 15, 2008 01:32 PM

You two who have first commented are immoral, liars, and ignorant. Freeways create sprawl because they encourage people to drive. Living in dense urban cores answer many of the questions you wish "Green Shady Grove Villa Terraces" would answer but don´t. Please spare the rest of the world your inadequacies. You probably voted for Bush, yet you lecture me about boondoggles?

Posted by: andrew at June 15, 2008 09:27 PM

Andrew,

Pretty strong words (and very unfriendly/tolerant of strangers, those whose politics you don't KNOW do you?).

Blanket name calling and wild assumptions and not taking the issues details at hand to be critical of is not a good reflection upon yourself nor how you deal with others, regardless of party affiliation, etc.

"Commissar" Crickshank is a little too left of logic on this issue where his go with the green flow overrides the problems with this issue, probelms he doesn't address...again. Just like you didn't address the meat of the issue at hand yourself...

Now there is a lecture subject for you!

PEOPLE create sprawl...not freeways.

DENSE URBAN CORES? That would be LA and the Bay Area; Just WHAT regions, WHICH PEOPLE is HSR, with all it's costs, construction pollution/scars on the land, and electrical energy demands all being proposed for? Those in DENSE URBAN CORES. So they can cruise from one core to the other, RIGHT???

Our state government is doing again a porr job with our tax dollars. Is that OK with you?

Posted by: Jay Gould at June 16, 2008 06:17 PM

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