Recession Slowing Down The Hiring??

[Poahi]

Airlines are for the most part pretty short sighted. They tend to hire/run classes right until they furlough.

Their goal is to make their problem, your problem.

 

[Poahi]

IMHO, I think it is going to get very ugly.

My opinion anyhoo... Worth what you paid for it.

I think most people, and especially cheerleaders for the legacies, tend to miss what happens during an economic slow down. We also tend to have a short memory. Just a couple of years ago, it was hard to find someone who said the housing bubble was going to burst.

911 didn't cause the last downturn in the airline industry - that was well underway earlier that year and the slow down initially affected business travel. This time, oil prices are going to drive a reduction in capacity and an increase in ticket prices. If the airlines are rational, they will raise prices to cover the huge hike in fuel costs. Add to that, leisure travelers will travel less as a recession and increase in unemployment takes hold, and you have a receipe for another perfect storm.

Then there are those that say the weak dollar is going to bail out the majors who fly to Europe and Asia. That isn't going to work either. The weakness in the dollar isn't going to offset $100 oil. They also forget one other thing; our economy is coupled with Asia and Europe. You can't assume our financial problems are contained within our borders. As goes America goes the global economy. Don't believe me, take a look at all of the major global indicies. Being naive is the most expensive thing a pilot can do. Forget the Koolaid and the "my airline's better than yours' rhetoric, no airline is immune to the laws of supply and demand.

 

[CFI2766]

I think most people, and especially cheerleaders for the legacies, tend to miss what happens during an economic slow down. We also tend to have a short memory. Just a couple of years ago, it was hard to find someone who said the housing bubble was going to burst.

911 didn't cause the last downturn in the airline industry - that was well underway earlier that year and the slow down initially affected business travel. This time, oil prices are going to drive a reduction in capacity and an increase in ticket prices. If the airlines are rational, they will raise prices to cover the huge hike in fuel costs. Add to that, leisure travelers will travel less as a recession and increase in unemployment takes hold, and you have a receipe for another perfect storm.

Then there are those that say the weak dollar is going to bail out the majors who fly to Europe and Asia. That isn't going to work either. The weakness in the dollar isn't going to offset $100 oil. They also forget one other thing; our economy is coupled with Asia and Europe. You can't assume our financial problems are contained within our borders. As goes America goes the global economy. Don't believe me, take a look at all of the major global indicies. Being naive is the most expensive thing a pilot can do. Forget the Koolaid and the "my airline's better than yours' rhetoric, no airline is immune to the laws of supply and demand.

One of the best, well thought out, logical posts here on FI. Finally.

It's my opinion that there will be a 'recession' (textbook or main st. definition) until the fear of a stagnating market is overcome by the greed of investors for an emerging market. This is not a bad thing, simply reality. Greed really is good.

 

[norskman2]

Airlines are for the most part pretty short sighted. They tend to hire/run classes right until they furlough.

Hire 'till you furlough, then furlough 'till you hire. At $108 a barrel oil, it's coming.

 

[Poahi]

So who is most exposed to high fuel costs?

RJ opeators- yes to the extent they are are not able to pass on increases and aren't properly gauged.

DC-9 operators. yes compared to similar sized A/C.

*Add your favorite gas guzzler here*

But in the end, I think we are going to see a reduction in frequency, especially for the short hops. That's going to make commuting a real challenge. I remember NWA doing this just after entering bankruptcy.

 

[ALIMBO]

HMMM maybe I should change majors I still have another year to go and I may not be able to get a job by May of 09. Fcuk!

 

[dhc8ap]

You should definitely have a backup plan. As for the recession/slowdown from the business side of it, fares on definitely increasing. I just priced out RT airfare CLT-TYS and it came to just over $800. USAirways is making money on that leg surely to offset the high fuel costs. Problem is, the airlines can't renegotiate the salaries to be any lower than they are.

 

[sflax]

Your comment about oil and the dollar are incorrect, one of the biggest reason for the high oil prices is due to the weak dollar. Traders need to turn there currency into dollars to buy oil. So goes down the dollar so goes up the oil price. Plus china and india are the market makers now for the stuff. So hang on for the ride.

 

[Captainzero1]

In addition OPEC has grown a backbone now that oil is over $100.00. They are holding the line on production. Only when we decide to wean ourselves off their crack pipe will oil prices fall again.

 

[sflax]

Correct. They have seen there profits fall as other nations have come onto the market as well, so 100 bucks a hit is great for them. But if we get off the rock, then the middle east becomes china's problem. And trust me, the red chinese army is not as nice as we are.

 

[dueguard1]

Hire 'till you furlough, then furlough 'till you hire. At $108 a barrel oil, it's coming.

Looks like we just popped that Cherry Yesterday....Speak of the Devil

 

[dingo222]

Here is a good article. JP Morgan Chase said yesterday that they expect US airlines to lose between 4-9 billion next year due to incresing fuel costs and lower demand for air travel. THis industry just started up and now it's heading right back down. Whoever said hire until they furlough is exactly right. Here's the link:

http://www.atwonline.com/news/story.html?storyID=12048