Airlines headed for the C word

[mtsupilot376]

The last thing we ned is more federal subsidies. When the federal government starts paying our bills they start to try to control things that do not need controlling. Ideally, the federal government should step back, reduce taxes in all brackets, cut worthless spending, like the department of education and the IRS, and let the FREE market work things out on their own.

 

[Flybywire44]

Point the finger at our govt for improper spending...

 

[Whydoitry]

Here's my question, what overcapacity? Every flight I am on or operate is full. The legacy I provide customers to has an over 80% load factor. The notion that supply is too high is stupid. People are going to fly, people need to fly. Raise the fares and see what happens. Anyway oil will not sustain these levels and will fall, again supply and demand.

 

[ifly4u]

Stop selling seats on sold out flights! The practice of overselling has created the appearance of an unlimited supply. This is part of the problem.

 

[jayme]

Ohhhhh, that c word.

 

[Danny040]

I remember flying when i was a kid with my folks. It was rare we did because it was so expensive and considered a privilege. They would make me put on my airplane clothes, dad would wear a tie, etc. Just a different era. They were still going bankrupt every other year back then too so I guess not too much has changed

 

[LowlyPropCapt]

Here's my question, what overcapacity? Every flight I am on or operate is full. The legacy I provide customers to has an over 80% load factor. The notion that supply is too high is stupid. People are going to fly, people need to fly. Raise the fares and see what happens. Anyway oil will not sustain these levels and will fall, again supply and demand.

You are right, industry loads are at an all time high, but load factor doesn't make profits, YIELDS do. Flights are full becuase many tickets are still deeply discounted, so even though people are filling the chairs, not enough revenues are being produced by those passengers to sell tickets.

By reducing the number of flights, the airlines are shifting the supply curve to the left. Lower supply equals a more scarce resource. Scare resources in turn lead to a higher price for that commodity.

The real question for the airlines is, how far can they cut supply before the subsequent drop in demand (caused by higher prices) negates any benefit of a capacity reduction. That is the real question that has yet to be answered.

 

[JJET44]

You are right, industry loads are at an all time high, but load factor doesn't make profits, YIELDS do. Flights are full because many tickets are still deeply discounted, so even though people are filling the chairs, not enough revenues are being produced by those passengers to sell tickets.

By reducing the number of flights, the airlines are shifting the supply curve to the left. Lower supply equals a more scarce resource. Scare resources in turn lead to a higher price for that commodity.

The real question for the airlines is, how far can they cut supply before the subsequent drop in demand (caused by higher prices) negates any benefit of a capacity reduction. That is the real question that has yet to be answered.

That's all fine and good if the airlines raise prices after they reduce supply, but they don't.

The airlines are are FULLY at fault for what's going on. If you owned a candy store and bought cases of canybars at a unit price of $1 each, you wouldn't turn around and sell them at $.75 each just to compete with other stores. Retailers have a term for this "Liquidation sale".

Airlines; reduce supply, raise prices to assure profits and if your competitor doesn't follow, don't worry because they won't be around for long.

Government; STOP BAILING OUT BAD BUSINESSES.

Investors; LEAVE THE AIRLINES ALONE, especially the credit card companies. They're doing more harm then good.

 

[jmreii]

I wish every person in America who ever uses or has used a commercial airplane to get somewhere could read this article. All people hear about is American charging for bags and US air charging for drinks and fare prices going up.

Average Joe Q Consumer thinks they are entitled to pay no more than $250 to fly anywhere in America and that they are getting scamed by the airlines when they raise prices. Very few seem to realize that the airlines are on the absolute verge of annihilation if oil doesn't go down soon.

Somthings gotta give soon.....

no, what we actually see is bad service that would not be tolerated on any level in any other industry.

 

[flyboyike]

Riddle me this. "Analysts" keep saying that oil prices will only keep going up. OK, I get that. But if airlines start folding (and therefore not using fuel), then the demand will decrease, correct? And in an alleged "market economy" what's supposed to happen to the price if the demand decreases? Let me remind you what happened to the price of gas after not a single airliner took to the skies between 9/11/01 and 9/15/01.