Originally Posted by
JoeyMeatballs
I dunno, usually cheap gas leads to overcapacity which always precludes the industry's death spiral. I hope I'm wrong but capacity discipline has been mentioned a number of times as a main reason for large profits. I'm sure (I hope) Im wrong but we'll see
No, you're exactly right, capacity discipline is what's driving a good portion of the profits we're seeing in the airline industry. Operating costs are lower, ticket prices are increased and airlines make money. I don't think with cheaper gas this time you'll see an increase in capacity. Delta for example has some of the oldest planes in the industry, I think you'll see them gradually lower the average age of their fleet, that's the type of improvements I'm talking about. The days of 12 flights a day from ATL to LIT with an MD-80 are over.
But, cheaper gas is not going to lead to lower ticket prices, if anything ticket prices will slightly increase as a whole. There will be gimmicks like Delta's ultra value tickets, but not wholesale lowering of ticket prices. Competition has pretty much been stabilized amongst the big carriers with only SEA in contention, and that's not even a battle between large legacy carriers.