The Juice

With all the bad news recently with the airlines and the soon to come news of more airline failures is this going to be a good thing in the long run?

Pilots out of work is a horrible thing but isn't it time the airlines look and revamp their business model? You can not continue to operate a company based on a 20 year old business model based on $20 b/oil.

How do the European airlines do it. One thing they do it charge for everything. Every checked bag is charged. Want a soda, that will be $1.50. Wish to pay with a credit card, that is a $3.50 surcharge.

Also when will the government step in and say enough is enough with fuel pricing and airlines scared to bump fares in the fear another airline will lower prices on that same route.

When oil prices/speculataion rise we see an increase at the pump in the days to follow, a drop in price and we see a drop as well. It would be great if the government could establish a rolling fuel surcharge for all tickets which reflect the current price for oil. No more of this random $5 or $10 surcharge. If oil jumps 5% in one day airline tickets should all go up 5% as well, back down 4% the next day well now tickets are 4% cheaper

Just picture this, you buy a ticket and on the Total Amount Due page you see government taxes and a fuel surcharge which explains the amount is based on that day/week oil price.

Nevertheless the government needs to step in and say "enough is enough," lets fix this so we dont call it "price fixing." Sad how concerned our government is with steroids in baseball and not the collapse of our air transportation system.

Thoughts?

btwissel

i think on the whole things will be better once the dust settles.

the biggest problem with the industry, and the economy as a whole, has been the face that nothing has been allowed to implode/die off as needed. some airlines have been propped up for decades off and on, when the gov't should've let them die.

once this pain has subsided, we'll be left with fewer, stronger, more adaptive companies more apt to survive in the long run.

we just have to get through the pain of the current situation.

reevesofskyking

It might be as bad later down the road if fares start going up.
Did I read right yesterday that United is going to raise all round trip fares 20 dollars.

If I did not imangine that up, that could be the start of the trend of fares raising to cover cost.

For every other business thats a good idea

matlok

Heaven forbid a company raise the price of it's product to cover the cost of doing business.... that would be horrible...

ACEAV8R

My opinion is only the strong will survive. The days of all the low cost carriers is running to the end of it's course. I am not trying to turn this into a political debate but the election will definitely bring some changes. And of course, when things settle down, we're gonna do this and talk all about this all over again.

Bond

The word cyclical comes to mind. It all depends on when you got in; timing is everything in this industry. As far as pricing, as long as you got the LCC model out there, prices may go up, but not by much industry wide. We shall see.

SeatMeat

Good post, Juice. Everyone from the grocery store to Pizza Hut to FTD are charging more to cover the cost of doing business. So why don't the airlines? One thought that comes to mind is that we now have the internet to check all rates in a matter of seconds. 15 years ago we had to go to a travel agent or make the calls ourselves.

I think that many people are like me in that they are proud of themselves when they find the absolute dirt cheapest rate around to get to Point B. Put be in seat 33B next to the fat guy. I don't care. Just as long as I only pay $69 for the ticket.

iahflyr

I think the airline industry has the potential to be in much better shape after this recent "cleansing."

Hopefully, the large amount of carriers filing for bankruptcy or shutting down in recent weeks is enough to convince Delta and Northwest to merge. If this happens, I believe United and Continental will be right behind them to merge. This is GOOD for the airline industry long term. Fewer airlines means less cut throat competition, and more pricing power. More pricing power leads to higher fares, and that leads to airline profits.

I think the best thing we can hope for is all the bottom feeding start ups (Skybus & Virgin) go out of business. Then the middle of the road LCC's (Frontier, Spirit, Jetblue, Airtran, Midwest) either merge with one another, or are picked up by a larger carrier (AA, UAL/CAL, DAL/NWA, US Air, or Southwest).

There has been some talk of re-regulation recently, but I am not sure how I feel. On one hand, it has the ability to kill the cut throat compeition that is destroying our industry. But on the other hand, it seems like regulation was not the best idea either. I am hoping for the best of both world's. I feel if our industry had just a few large players (AA, UAL/CAL, DAL/NWA, Frontier/Spirit/Jetblue, Airtan/Midwest, Alaska/Southwest), we could have a strong industry with the ability to pass costs onto the consumer. We wouldn't need the government regulating the industry, but having just these few carriers would almost be a form of regulation.

I also think this downturn may be enough to stop start-up's for a reasonable amount of time. You'd have to be stupid to invest in a brand new airline with today's lack of pricing power in the industry and the obvious $112/barrel oil. New start-up's like Virgin and Skybus will not be dragging the industry down for several years to come.

I just hope the weak links are eliminated (Mesa, Virgin, Lynx, etc...), and the ones left standing are able to consolidate and merge to make this industry a better place to work.

OntheMissed

Great post, I was wondering the same thing. It really sucks for everyone finding themselves without a job. I was one of those guys earlier this year. Maybe with less carriers, the ones that are left can fill their seats more efficiently leading to more agile and lean companies. Commuting will suck even more though. Aw, who am I kidding. I don't know anything, I just sit upfront and point the damn plane where I'm told.

JoeyMeatballs

Less airlines = higher ticket prices = higher paying flying jobs= much more competition, so its a catch 22, pay is terrible now but it is easy to get with an airline, if we see these big time mergers, once all the furloughed guys are recalled in 10 years then think about the competition for new-hires..............