Thoughts regarding market's effects on airline travel?

[JohnDoe]

Amen boxjockey.

As you stated, 2/3 of the economy is the consumer. Well, the consumer is tapped out, alot of 'em in debt up to their eyeballs, losing jobs, stagnant pay, inflation (the real numbers, not the politician bs) and the ATM machine known as their house has been unplugged.

I'd like to know what could possibly save us at this point as well. Adding more tax burden on the masses with huge bailouts? IMHO the easy credit craze can't continue forever. It will only delay the inevitable.

 

[Daddy]

Future of airlines.....

1) Strong dollar will hurt international travel more than domestic

2) Domestic travel will suck too

3) There will not be an airline bailout

4) Any company who goes into BK now will probably go Ch 7 as there will be no financing to come out of Ch 11

5) While some are better off than others, we will all feel this in one way or another...just surviving will be key as there will be much less competition out there when this is over with and the survivors will reap the benefits of the reduced competition

6) If you think McCain will not sell our collective airline labor souls, you are as delusional as those who think Obama and a total democratic mandate in the house and senate will not raise their taxes or kill their company through over-regulation and corporate taxes

7) I would still rather fly than do some boring office job

 

[scoreboardII]

What boxjockey said.

Also, 6 months of calm in the DOW 6-9000 range as those with money get theirs out and Governments throw cash at the bottomless pit LOOKING like they know what they are doing.

Then when Joe Citizen realizes his bank reduced his credit limit from $20k to right where his balance is, $12K, he is out of credit and now has a 15% loan to be repaid. Joe now stops spending, or defaults and becomes another statistic. Either way, Joe stops spending, people are out of work, the spiral begins and doesn't end until the books are balanced at bottom, I say DOW 5000ish. At DOW 8000 we are at about 17PE, we need to be at 10PE.

Half of the following will close: Starbucks, car dealers, big box home repair stores, malls, and banks.
It will take about 3-5 years for this to work itself out.

It won't correct until WE take the economy back and start making stuff again. Screw China.

There will be soup lines.

50% of all airlines will be gone, 70% of all capacity will be gone.

Your house will be worth 30-50% of what it was worth when this started. If you can afford the payments, you get to pay the original price even if it's two or three times the value. The government will only let those who can't pay get off...

Governments will step in and regulate the airlines to keep the industry alive as a national neccesity...

Not quite Escape from New York, but close...

 

[Poahi]

some people say Netjets won't be affected because rich people who own their own....

Bye Bye--General Lee

True, but after this week, a lot of rich people aren't rich anymore.

The next wave is going to be the pull down of international flying.

 

[Fly2Scuba]

What boxjockey said.

Also, 6 months of calm in the DOW 6-9000 range as those with money get theirs out and Governments throw cash at the bottomless pit LOOKING like they know what they are doing.

Then when Joe Citizen realizes his bank reduced his credit limit from $20k to right where his balance is, $12K, he is out of credit and now has a 15% loan to be repaid. Joe now stops spending, or defaults and becomes another statistic. Either way, Joe stops spending, people are out of work, the spiral begins and doesn't end until the books are balanced at bottom, I say DOW 5000ish. At DOW 8000 we are at about 17PE, we need to be at 10PE.

Half of the following will close: Starbucks, car dealers, big box home repair stores, malls, and banks.
It will take about 3-5 years for this to work itself out.

It won't correct until WE take the economy back and start making stuff again. Screw China.

There will be soup lines.

50% of all airlines will be gone, 70% of all capacity will be gone.

Your house will be worth 30-50% of what it was worth when this started. If you can afford the payments, you get to pay the original price even if it's two or three times the value. The government will only let those who can't pay get off...

Governments will step in and regulate the airlines to keep the industry alive as a national neccesity...

Not quite Escape from New York, but close...

A dire prediction. Just like wx forecasting it could happen, but I'd bet that more that because every country in the world is in the same boat, that the collective minds of all the financial world experts in this information age will find enough solutions to soften the blow.

My main concern is that because of populism, whatever measures that are taken now will only help for a few years but won't stop inevitable problems in the future. Although I really hate age 65 rule and in this career find it quite doable and logical for health purposes to retire as a pilot by then, I must add that society in general has unrealistic unproductive expectations to retire completely from the workforce at age 60 give or take a few years while the life expectancy continues to go up. Add that to an overall unhealthy lifestyle mix while expecting health care as a basic right and for said health care to provide life sustaining care at any age. Then add a keeping up with the Joneses mentality with products from foreign countries, and you have a recipe for continuous illogical populous cultural disaster.

 

[Flopgut]

None of these pessimist opinions are wrong. I hope they are, but I'm not disagreeing.

My competeing opinion:

Oil price coming down. Will stay lower IMHO.

Consolidation will come in one big, fell-swoop and drive ticket prices up. Revenue fundamentals will create smart growth and age 65 will wear off creating pilot supply/demand positives for aviators.

Did NJA double or triple in size in the last 10 years? They were maybe 40%-50% of the total growth of fractionals? Ten grand an hour for a bizjet? That's going to be changing! They will start to come back to the airline at a ticket price we can make money at. There won't be that many new super-rich types that will opt for bizjet travel.

CEO pay not in line with performance will drive away the carpetbagger airline CEO types.

 

[gutshotdraw]

None of these pessimist opinions are wrong. I hope they are, but I'm not disagreeing.

My competeing opinion:

Oil price coming down. Will stay lower IMHO.

Consolidation will come in one big, fell-swoop and drive ticket prices up. Revenue fundamentals will create smart growth and age 65 will wear off creating pilot supply/demand positives for aviators.

Did NJA double or triple in size in the last 10 years? They were maybe 40%-50% of the total growth of fractionals? Ten grand an hour for a bizjet? That's going to be changing! They will start to come back to the airline at a ticket price we can make money at. There won't be that many new super-rich types that will opt for bizjet travel.

CEO pay not in line with performance will drive away the carpetbagger airline CEO types.

"You keep thinking Butch, it's what your good at."

I have had more than one passenger in the back say the corporate jet would be the LAST thing they would ever get rid of. The Bentley? See ya. The second and third mansion? History. The mistress? Adios. The jet? Not a chance. Not til the repo man comes to take it.

Rich people are quite adept at staying rich and there will be entirely new fortunes created, even in this economy. People with cash (like our Uncle Warren) are buying up assets at bargain basement prices because they know they will make money, lots of money, on the back end.

 

[JohnDoe]

Consolidation will come in one big, fell-swoop and drive ticket prices up.



CEO pay not in line with performance will drive away the carpetbagger airline CEO types.

That's part of the problem. IMHO consolidation (in any industry) will never happen in one fell-swoop due to the government's refusal to allow any company to fail. They have proven time and time again over the last 6 months (and more) that they will not allow anybody to fail. What happened to our supposed free-market economy? They are considering giving (already gave?) 25 billion in govt. backed loans to the auto industry to "re-tool" their manufacturing capability for more fuel-efficient cars. WTFO?? That is an expense of doing business, an expense of producing a product. Why on earth is the government giving them money to operate their business?


With regards to you're second point: I do not believe that will ever happen in any corporation. The board of directors of these companies are far too incestuous and institutional. Good 'ole boys club to the last. I flew one of their type on a charter trip some years ago. It was amazing the number of different boards this individual was on.

 

[Flopgut]

"You keep thinking Butch, it's what your good at."

I have had more than one passenger in the back say the corporate jet would be the LAST thing they would ever get rid of. The Bentley? See ya. The second and third mansion? History. The mistress? Adios. The jet? Not a chance. Not til the repo man comes to take it.

Rich people are quite adept at staying rich and there will be entirely new fortunes created, even in this economy. People with cash (like our Uncle Warren) are buying up assets at bargain basement prices because they know they will make money, lots of money, on the back end.

I'm sure if there is one fractional that won't feel too much pain, it'll be you and your uncle Warren's.

The others? I don't know. The Marquis Jet Card types? $200K vs. 20K is a big difference. You've got a lot of people with a lot of dough riding in style. You've also got a lot of people riding in style because the people with a lot of dough pay the tab. I think that's going to change.

I'm airline, so I'm biased. But I would be more than casually concerned that the tax/user fee paradigm might change significantly for private jets. IMHO, when your jet takes up as much space as mine I think the fee/tax economies should be scaled. AND, of course, airline flying is taxed higher than cigarettes and booze. So it could get pricey very quickly for the biz jets (and it probably should). I'm abundantly clear on the ability NJA has to pass on ANY cost to core customers. But I don't think that's all fractional customers and I don't think it's going to represent future growth like there has been in the past.

 

[Flopgut]

That's part of the problem. IMHO consolidation (in any industry) will never happen in one fell-swoop due to the government's refusal to allow any company to fail. They have proven time and time again over the last 6 months (and more) that they will not allow anybody to fail. What happened to our supposed free-market economy? They are considering giving (already gave?) 25 billion in govt. backed loans to the auto industry to "re-tool" their manufacturing capability for more fuel-efficient cars. WTFO?? That is an expense of doing business, an expense of producing a product. Why on earth is the government giving them money to operate their business?


With regards to you're second point: I do not believe that will ever happen in any corporation. The board of directors of these companies are far too incestuous and institutional. Good 'ole boys club to the last. I flew one of their type on a charter trip some years ago. It was amazing the number of different boards this individual was on.

Good or bad? I don't know, but I think we're headed toward a more socialist-like future. IF, labor related issues can be addressed along with competitive issues, I think we're bearing down on wholesale consolidation. Closer now than we've ever been. Other industies are going to lead the way and the momentum will drag us all along.

I hear what you're saying, but "never" is a long time. I think it might happen.