The flights is likely to double as we

The more
OPEC cuts the supple of oil, which is needed for airplane fuel, airline
companies have to depend more and more on hedging. In an ideal case, the
company has a flexible policy regarding hedging that matches to tries to match
the fluctuations. If “OPEC” decides to produce more or increase supply then the
companies will be left with extra output. If the company is considering relying
on Shell instead of the bigger OPEC then this is will be an advantage because
this will be a natural hedge against any OPEC decision to cut or increase
production, providing the company with more stability in that field. However,
the choices are still narrow and changes affect the entire market1

One major
shift will be the use of certain flowers, or natural herbs (algae, flax,
coconut husks or even from used cooking-oil) to produce airplane fuel( Bio Fuel),
this is a huge advantage because the airplanes engines will not have to be
replaced, changed or even renewed because of the newly produced fuel. We are
talking about a fuel that is eco-friendly and “green” because the plants from
which they are derived absorb CO2 from the atmosphere as they grow and release
it when they burn, and this fuel is renewable unlike the classic fossil fuel.
Since the number of passengers and relatively the number of flights is likely
to double as we go into 2030, having such a replacement is good news in a
“Win-Win” situation.2

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One example
would be Airbus; they also say the technology, in which it and the Bavarian
government are investing more than 10 million euros ($11 million) between them.3

Secondly, aircrafts are
considered one of the most important and highest expense in the
airline industry. The main
suppliers within the airline industry are the manufacturers of aircrafts like
Airbus and Boeing, Two major determinants in terms of aircrafts and their
manufacturers are sale or lease basis, which means that it mostly depends on
the companies and whether they want to have the aircrafts as assets on their
balance sheet or would prefer a higher ROA by applying the lease basis. Moreover, at the current stage, aircrafts for long
distance travel cannot be substituted by any other product, which strengthens
the bargaining power of the suppliers even more. In this industry,
the inputs are extremely standardized allowing for only minor changer. Airline
companies only seem to differentiate with amenities. The planes are very
similar. Bulky aircraft purchases are also very common.4

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