Originally Posted by
DrJekyll MrHyde
Agreed. And the price of fuel is due to take a jump after the election in November (as it very often does), and it's over due anyway. Even though I think the ULCCs can thrive in a high fuel cost market, I believe the negative effect it will have in the majority of U.S. Airlines will cast a large shadow - big enough sway investor confidence in our ULCCs. IMO, the timing for an IPO is as good as it can get for the near future.
I don't think you understand the factors that drive the price of fuel.
At the end of the day, it's a supply/demand problem that is truly unaffected by any election.
If high fuel cost is driven by excessive demand, well then business is good and everyone prospers (at least temporarily).
If high fuel cost is driven by strife and restricted demand (ie embargo) etc, then that will be problematic for the whole economy much more quickly.
Chances of the first happening seem really low due to worldwide economic slump at the moment.
Chance of the latter seems somewhat remote as many parts of the world are now producing oil and are eager to sell due to waning budgets.
I think it's yet to be determined that ULCC's will "thrive" in a "high fuel cost market" as that generally affects the budget conscious / pleasure traveler even more than the business market, but both are affected.
Also, when fuel is high, market priced labor is less of a piece of the cost of producing the widget than having sub market wages as the high fuel cost overrides all.
Bottom line, high fuel is not really good for anyone in this industry, and IMO would affect the ULCC's as well. I guess we'll see if your hedge on the industry is correct (well after your predicted fuel spike in November anyway). Best of luck to all of us.