Quote:
Originally Posted by 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.
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.