Turbulence Ahead For Discount Airlines

[philo beddoe]

For better or worse, I predict in ten years the elimination or severe cutback of defined benefit plan, and the failure or consolidation of at lest two majprs and LCC's.


See you in ten years, I'm buying if I am wrong.

 

[jetflyer]

philo beddoe,

You're buying if you're WRONG, but you better buy if you're RIGHT TOO!

There will be a lot of us without jobs if you're right, so we won't be able to afford that drink!!! I'll take a Miller Lite

Jet

 

[climbhappy]

i read recently mortgage financing has tailed off, way off and the it has been the only source of cash americans have used to finance this recovery. real income growth has declined.

having said that, can the american consumer, one who loves cheap airline tickets to take vacations and spend more on their credit card, keep these discount airlines' seats full?

 

[jetflyer]

Climbhappy,

If the consumer does have less cash to spend, the scary thing is, they're gonna KEEP looking for the LOW TICKET PRICE and some will stop flying.

This is gonna not ONLY be bad for the LCC but also for the LEGACY carriers. We all know the airline industry has too many players right now, and soon there will be the new Virgin! Let's all hope not too many airlines go Chapter 7 during this weeding out process.

Jet

 

[FL510GV]

airline economics

One of the basic tenents of airline economics is that to keep costs "lower" you must grow. This is because of the seniority based salary system. The more "junior" employees, i.e. the more employees at the bottom of the salary ladder, the lower your average employee salary. SWA is adding seats as fast or faster than anyone, why is it then "counter-intuitive"?

 

[Jeff Helgeson]

Another view

i read recently mortgage financing has tailed off, way off and the it has been the only source of cash americans have used to finance this recovery. real income growth has declined.

having said that, can the american consumer, one who loves cheap airline tickets to take vacations and spend more on their credit card, keep these discount airlines' seats full?

There are plenty in this contry that always live beyond their means. They are always in debt , but still drive newer cars and take vacations, while complaining they just can't get out of debt. Some will buy a new car, take a vacation and rent a home and say "I just can't come up with a down payment." It is all about priorities.

I don't think the LCCs will be at risk from the above. In addition, interest rates are still at an all-time low relatively speaking. However, I agree our economy has been floating on the real estate/refinance shuffling of existing money and does not reflect new growth in the economy.

See you in Cancun, I like your new ride! Zero down and zero interest for 5 years, rock on my friend.