1 Airlines’ fuel bill to drop 25% in 2016 (Shweta
Jain in Gulf News) With oil prices continuing their slide, the global airlines
industry will see fuel bill drop to $135 billion next year, representing 20.6
per cent of their total operating costs. This is a 25 per cent drop compared to
the $180 billion fuel bill the carriers had to bear in 2015 (comprising 27.4
per cent of operating costs), and a whopping $226 per cent in 2014 (comprising
31.6 per cent of operating costs), according to IATA (International Air
Transport Association).
Low oil prices resulting in strong air travel will
be key drivers of growth for airlines next year, according to Brian Pearce,
IATA’s Chief Economist. “Jet fuel prices have fallen substantially and we base
our forecast on an average price of $63.8 a barrel next year, and $51 per
barrel for the Brent crude oil prices.
The future price of oil is highly uncertain, with
some forecasters expecting $20 per barrel in 2016 while others expect a rise to
$60 per barrel. According to the aviation trade body estimates, stronger
economic performance in some key economies (including a faster than expected
recovery in the Eurozone) is outweighing the overall impact of slower growth in
China and the downturn in the Brazilian economy.
And the global GDP (gross domestic product) growth,
which is expected to improve to 2.7 per cent in 2016, up from 2.5 per cent for
2015, is only expected to make the prospects brighter. With 3.8 billion
passengers expected to travel in 2016, the demand for passenger travel is
expected to grow by 6.9 per cent (similar to the estimated 6.7 per cent growth
for 2015).
The airlines are likely to end 2015 with record high
load factors of 80.6 per cent, tapering slightly to 80.4 per cent in 2016,
indicating efficiency gains. Capacity, which is increasing, is expected to move
ahead of demand growth in 2016, while yields, meanwhile, continue to
deteriorate amid stiff competition, according to IATA.
2 Productivity slump as a harbinger of better times
(Barry Eichengreen in The Guardian) Recent trends in productivity growth make
it hard to be optimistic about the future. In 2014, the global growth of total
factor productivity, or TFP, which measures the combined productivity of
capital and labour, was essentially zero for the third consecutive year.
This was down from 1% in 1996-2006 and 0.5% in the
crisis years of 2007-12. And, by every indication, 2015 has been no less
dismal. If the underlying rate of TFP growth has fallen from its historical
norm of 1.5% a year to near zero in countries such as the US, then the living
standards of today’s young adults will rise much more slowly than those of
their parents. Any increase will depend on improvements in education and
training, which are absent from the data, and from investment in equipment and
structures, which is depressed relative to historical levels.
Economists such as Robert Gordon of Northwestern
University argue that this slump in productivity growth reflects the stagnation
of technology. He argues that all of the epochal advances, from running water
and electricity to the internal combustion and jet engines, have been made. The
positive effect of instant messaging and video gaming on productivity and
living standards pales in comparison.
This conclusion will strike many people – especially
those of us who live on the fringes of Silicon Valley – as implausible. We see
radical technological advances in robotics, artificial intelligence,
biotechnology, and materials design going on all around us. One view is that it
takes time for the productivity-enhancing effects of new technologies to show.
Indeed, when radical innovations are rolled out,
their immediate effect is to reduce, not raise, productivity. Electricity, the
new technology studied by Paul David, economics historian at Stanford
University, is a case in point. Defore electric motors were installed in
factories, machines were arranged around centralised steam engines, to which
they were connected by belts and pulleys. Self-standing electrical motors meant
machines, the workers operating them, and their activities all had to be
reorganised in more efficient ways.
But this reorganisation took time. Meanwhile,
established modes of production were “disrupted”, in 21st-century business
school parlance, causing productivity to fall. But this slump in productivity
was a harbinger of better times.
3 South Africans resigned to live and let bribe (Katherine
Child in Johannesburg Times) South Africans believe that to get through the day
you'll have to pay a bribe. And the results of a survey indicate that 10% of
people believe bribery should be legalised.
"If we think everybody is doing it [paying
bribes] it becomes easier for people to justify it to themselves," says
the report, authored by The Ethics Institute. "The perception that bribery
is part of life is a manifestation of the South African culture of
impunity," said Paul Hoffman, director of the Institute for
Accountability. "If this endemic corruption continues South Africa will
become a failed state."
Some bribes reported included "paying to get
away with a murder case or to avoid arrest for selling drugs". The most
common bribes were paid to avoid paying traffic fines. Unskilled people felt
they were "expected" to pay bribes to get sought-after employment. One
said "It is a matter of life or death for uneducated people". This
illustrated how vulnerable, unskilled people were exploited, said the
institute.
People can be tempted into corruption by the
perception that corruption is endemic in their society and by the belief that they
are unlikely to be caught. The pervasiveness of bribery in South Africa allowed
people to justify it easily.
The survey results were released a week after a
Transparency International survey revealed that at least 83% of South Africans
believed corruption had increased in the past year. In that survey, 7% of the
respondents said they had paid a bribe. The Ethics Institute survey arrived at
a figure of 25%.
Tellingly, in South Africa - rocked by a number of
corruption scandals, including the spending of R246-million of public money on
President Jacob Zuma's private home in Nkandla - 79% of the Transparency
International respondents said the government is doing poorly in fighting
corruption.
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