Good points. Last time this happened we cut capacity by 25%. Returned 7 airplanes and furloughed 125 pilots. The core problem was not so much the coming recession (albeit common belief we are not a purely vacation airline) but the high spike in oil prices combined with our low cash reserves.

Then in late 2008 when oil crashed it became clear that the drastic capacity cut was a mistake. Demand for cheap tickets remained strong. The public was more budget restricted so they were looking for cheaper ways to travel. We ended up being profitable even for 2008. Management was scrambling to replace the lost capacity but due to changes in down payment and other credit requirements for new deliveries, it took a long time to do so. We could not finance the down payments anymore.

I have no clue what will happen. I am convinced we are in a recession already. However oil did not peak as high as it did last time even with the weaker dollar. Unlike in 2008 when you could hear and feel the panic in the air, it seems we are cranking up hiring and I think the owners can't wait to jump on the opportunity to pick up any capacity that is cut by the big players.

Cheap is good when people are having less and less money. As long oil is not up in the $120s there is plenty of places where we can plug in an airplane and offer low prices. Even with the horrible PR we keep getting, wherever we have started service recently, folks showed up almost immediately. They are getting used to the product and they know what to expect. The rest of it is simple math. Ticket + charges = still less than anyone else. Some will put up with the problems, some will pay more and fly on a different airline. Soon many will not have this choice.