Thoughts regarding market's effects on airline travel?

[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.