Airlines headed for the 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.

 

[11thHour]

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.

Commercial aviation consumes a surprisingly small amount of what oil the US uses, so I don't think the impact would be as large as you would think. Also, the world economies are demanding increasingly large supplies of oil, so even if we demand less, this is largely mitigated.

 

[Propsync]

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.

Sure about that? Ask the Frontier folk if that sounds like the right thing to do.

The airlines have started to self-regulate. Expect career stagnation to continue as long as we're in a recession. As I've said in other posts, just the reduction in air travel over the next 6 months to a year will help keep us in a recession. There will be many lost jobs in the businesses that touch commercial aviation. Theme parks, rental cars, hotels, etc. Once air travel slows down, and it will, the squeeze will be passed on to the next sector. It's a slow chain reaction, and we'll see this fall how bad it will get.

 

[OPECJet]

A novel idea would be for the airlines to charge a fare that covers expenses rather than nickel and diming pax to death.

The latest move by US turns them into Skybus minus the $30000 FO's, $60000 captains and stock options.

 

[ex j-41]

If an airline goes bankrupt than it should liquidate. If its my company than so be it. A big problem that became everybody's problem is the fact that weak bankruptcy laws kept certain airlines going when they should be gone and done with in this god forsaken overcapacity market. There has to be losers and there has to be winners.

Nice thought but it can't happen. The problem is that there will be too many people unemployed and that will kill the economy. People using goverment unemployment benefits is a large one. Then in the local community people won't be able to pay their mortgage, car payments etc... Crime will steeply rise and so will the violence.
The bankruptcy laws were in place for companies to reorganize in times of trouble. For unexpected circumstances, like 911, fuel prices rising 400%. Management doesn't have a crystal ball and they can't predict what is going to happen in the future. Maybe fuel will decrease 400% and then we will have a couple of good years till the next bump in the road.
The laws are there to protect the people or workers. Yes the side effects are that management builds their golden parachute.

On a different note i can't believe that people here are talking about regulating the industry. What we are seing here is pure capitalism. Let it run it course if capitalism is what you believe in.

 

[Herman Bloom]

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.

Another big reason for the spike in prices is the burgeoning demand being generated by China and India (which are HUGE and growing). Welcome to the new world: the U.S. will be the #2 economy in no time.

 

[Flyer1015]

disregard

 

[say again]

My ex is the C word!!!

 

[Flyer1015]

Well,




<-------- He is a kunt face! He can't lead Pinnacle.