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USA Today front cover on the AVIATION industry (repost)

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Lear70

JAFFO
Joined
Oct 17, 2003
Posts
7,487
I want to know who moved this chat into "non-aviation".

We're talking about the biggest, single change in the face of commercial aviation history since deregulations and 9/11 and you think it's NOT about aviation?

Longhorn, if this was you, I'm going to recommend a reasonable-suspicion drug test to your employer. ;) If it was someone else, you might want to redefine your definition of what is "non-aviation" versus what is "aviation" oriented.

Genius. Now... back to the AVIATION ISSUE

The article smacks of pre-conditioning the American public for upcoming fare increases, giving a lot of good reasons why they have to increase, but it also is alarmist in predicting how much loads are going to fall off without giving a price point at which that will happen.

I can't believe the entire day has gone by and no one has even briefly commented on the USA today front page article regarding oil prices, imminent fare increases and capacity pull-downs, and the result on leisure travel and related travel industry segments (cruises, hotels, etc).

While I think they are being alarmist at just how many people will quit flying, they did make it blatantly obvious that fare increases are coming. The question is, at what price point do you think people will stop flying?

For the leisure traveler? Certainly $10 a piece wouldn't stop them, but would $50? $100? With a family of 4 or 5 going to see the grandparents or going on a Disney Cruise, add $500 plus taxes to the bill and you just blew your spending cash for a couple days once you get to your vacation destination.

For the business traveler? Most of them expense it, but at what point will the manager say the cutoff is for viability of a face-to-face meeting or convention is worth it? $100 increase? $500 increase?

It's an important distinction because the LCC segment that relies so heavily on the leisure traveler and small-business executive, that breaking point becomes life or death for the carrier.

The legacies have, in all likelihood, a different breaking price point, but I can't imagine it's THAT much higher than the LCC's break point.

Although the article did a pi*s-poor job of spelling this out, where do YOU guys think the breaking point is and at what point will we suffer major passenger fall-out?
 
Did you say load factors are coming down. Great, maybe now I can use my non-rev "benefits" to go to Hawaii.

In all seriousness, I haven't read the article, I don't touch the USA Today, unless I am at work (and I haven't been the last 4 days).

The travelling public better get used to higher fares, its going to happen, it already has. I believe that the bizman revenue will always be there, no matter if the cost increases. I don't see too many biz guys driving LGA-DCA or BOS-LGA and all the other biz routes. We'll see about the leisure travellers....
 
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Hmmm. Park RJs. Use larger jets. It sounds like 2008 will be the year of "undoing the 90's".

Many of us are all for higher fares and lower loads. Clearly, the airlines haven't charged enough money to run a sustained business plan for almost a few decades now.

Flying is not a right, it takes money. QUALITY, not QUANTITY should be the new creedo going forward.

There simply isn't enough resources in the industry to treat airplanes like greyhound.

Train, bus, car... or stay home if it costs too much.
 
Flylow, when did we start agreeing on everything......
 
That got my attention in the article as well.

Delta unloading up to 75 small RJ's THIS YEAR?

Either that's a misprint or there's going to be much wailing and gnashing of teeth from the RJ affiliates.

I imagine that might be a combination from both NWA and DAL fleets, but that's a lot of 50-passenger jets to be dumping on the market. Ouch.

p.s. I don't read that paper except at work either, just happened to see the headline as I walked out of my hotel room yesterday and thought "holy crap, THAT should get someone's attention".
 
The thing that I read from the USA today article is the fact that alot of people will be priced out of the ability to fly when oil reaches +$150/bl. The American people will be priced out of alot things at this point.

This will lead to the elimination of cash weak smaller airlines and a total restructuring of the larger majors (NWA/DAL, AA, CAL and USAIR/UAL etc.) by large capacity cuts (i.e less jobs at majors). Even mighty SWA will have to adjust.

The question is will oil go this high, and if it does how long will it stay there? Will it be long enough to drain the cash of the F9, JBLU, AAI, Spirit type LCC's. Forget about getting rid of SWA (dream all you want legacy dudes, they aren't going away).

If and when oil approaches $200/bl then no one is safe, but the bottom line is you have to price your product to cover your costs and that will keep alot of folks from flying.
 
Businesses - conference/video calls instead of travel will be the order of the day. Already is where I work and has been for over a year. It takes a VP approval to travel for business.

Leisure travel - folks will be searching for things to do closer to home that doesn't involve airplanes. Combine the high cost with the wonderful customer service and delightful TSA process and it won't take much to convince folks to spend their hard earned and scarce money elsewhere.
 
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The airport crowd's gonna look a lot less like the mall and a lot more like the office. Or the country club.
 
USA Today=McPaper

Small, tasty morsels with no nutritional value whatsoever.
 

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