ToiletDuck

"prise"? I'm with you on that one.

Three Green

Listen up people, hopefully some of you geniuses took economy 101. We are by all indications heading for recession. The consumer is reposible for about 2/3 of economic growth/activity. When the country enters a recession, people stop spending money on discretionary things such as air travel, business travel gets cut back or severely restricted (think teleconference). Raising fares is not the sole answer. The economy contracts in a recession including airlines. Raising fares to $1000 to go 500 miles won't mean anything if you dont have any freaking buyers for said ticket.

The boom times are going to slow down for awhile boys, get used to it. Go learn abour airline history 101.

ToiletDuck

I understand the principles of economics. Especially the part about supply and demand. It has been beat to death how much air travel is expected to increase beyond current capacities. Supply vs. demand. Currently the demand is very high yet the supply hasn't increased much. Companies are seeing record profits from the demand by consumers. This says they aren't charging enough. Up the prices until the demand/supply is equal where you've maximized your price per seat mile.

Three Green

TD, the forecast you are referring to did not take $100 a barrell oil into the equation. Airlines are purposely keeping capacity under control to help maintain fiscal sanity as well they should. You can't arbitrarilly raise prices overnight and you would see demand dry up, then what? It is a constant balancing act. The same way the feds are cutting interest rates to ward off recession and keeping inflation under control.

ToiletDuck

I haven't seen their equation so I'm not speaking with any certainty but I'd find it hard to believe that with all the precise statistics from the FAA planning future air route/aerodome usage, Nasa's statistics backing the FAA, independent firms like "The Boyd Group", and Wall-street style analyst that none of them factored in one of the most major, and most publicly talked about, factors... Fuel. Airlines themselves have been speaking about it around every corner and fuel prices have been predicted long in advance. In USA Today yesterday they already had the forcasted prices for this summer. Right now there is more demand than there is supply. I'm not saying there needs to be a fuel surcharge on each ticket that fluxuates daily. However a 10%(arbitrary number) increase across the board could help provide padding. Maybe when SWA's fuel hedge runs dry and they start having to up their fares more then the rest of the industry and join in. SWA is still on their hedge aren't they?

If raising prices isn't the sole answer then what is? I'm hoping you aren't saying employee paycuts. They've already restructured and trimmed what they can. Prices now are still far below where they were in the 70's. People flew then and they made less. If the industry does it in a nice smooth manner than things might look up. Put a frog in hot water he jumps out, put him in warm water and heat it he'll boil to death. Just like oil. It's been a slow fluxuation over and over to get higher and higer because $3.00 a few years ago was crazy talk. Every spring they up it for "summer vacationers wanting to travel". Every summer they up it for "fall/winter heating bills". Then in the winter they up it again because "it's the new year and they're expecting india and china's development to surge". Meanwhile they never let it go back down. It's just but a small spiral up and up. We're having the water around us heated and are slowly being cooked alive.

JoeyMeatballs

Not true, never been proven.............................

Eric Stratton

explain to me how southwest has been able to turn a profit year after year even during recessions? how did they turn a profit after 9-11 while the others were hiring bankrupcy lawyers. everyone was paying about the same for fuel back then. maybe it's poor business models for the airlines.

maveric311

swa has had the smalest fuel bill. for a while. awsome descision to hedge their fuel position and good market placement. is what saves them year after year. anyone know when there fuel futures is up?

mattisawesome

RECESSION: The common term used for the contraction phase of the business cycle. A general period of declining economic activity. During a recession, real gross domestic product declines by 10 percent or so and the unemployment rate rises from it's full employment 5 percent level up to the 6 to 10 percent range. Inflation tends to be low or non-existent during a recession. Recession last anywhere from six to eighteen months, with one year being common.



DEPRESSION: An extended period--a decade or so--of restructuring and institutional change in an economy that's often marked by declining or stagnant growth.


I would welcome a recession but I'm afraid that what we are headed for is a depression. We had one of the longest periods of economic growth in US history over the last decades. However, our dollar has lost 40% of its value against the Euro in 3 years, the baby boomers are about to retire and we have a massive debt on medicare and social security and it is about to spiral out of control. We have China and other countries holding tons of our debt. We have had slow, steady rises in energy costs and unless somebody comes up with some other energy source demand is only going to go up and so will prices. Ladies and Gentlemen I'd say we are on the eve of the next depression.

mattisawesome

southwest also has their point-to-point business model unlike the cumbersome hub and spoke model of the legacy airlines. The only plane southwest flies is the 737, and their entire company is built around that plane. They turn a plane in 15-25 minutes, I believe, the motto is get those planes flying as fast as possible. They are a well-oiled machine and their growth is always extremely conservative, and fuel doesn't hurt.