A new study carried out by AirlineForecasts and the Business Travel Coalition has concluded that the US airline industry is "headed toward catastrophe" at current oil prices, and "stabilising this ailing industry must become a national policy priority".
The study, which can be seen in full here, says that "with oil prices in the $135 range, airlines could be forced to park upwards of 1,000 aircraft and shed up to 80,000 employees, and still not return to health".
This gloomy outlook poetically states that with record oil prices, "the US airline industry stands on a ledge, staring into the abyss". It also calls on the US Government to "adopt new energy policy priorities with great purpose and haste".
Any thoughts on calls for the Government to get involved? The airline industry was, after all, deregulated - should it not just fend for itself and allow the strongest to survive and the weakest to perish? All questions that will no doubt be debated as US carriers continue to slash jobs and capacity.
on June 18, 2008 1:04 AM | Reply
The US airlines brought it on themselves. Due to their very aggressive yield management, no two passengers pay the same fare for what is exactly the same service. When there can be hundreds of dollars of difference between what you paid and what the passenger next to you paid, passengers soon had to start concentrating on price and a vicious cycle began.
Compare with Southwest where a return trip costs double what a one way does while the majors usually charge more for one way than return!
If you tell your customers that the only thing that matters is price, then they will behave that way. What is even more interesting is what will happen when the economy recovers. Will passengers remember the nickel and diming and go with airlines that treated them better during the bad times, or will they still only consider price? I personally have a long memory.
on June 19, 2008 10:25 AM | Reply
I guess time will tell, Roger. The first thing to watch out for though will be how many airlines are actually left standing once the economy recovers, and how battered and bruised they will be.
on April 30, 2009 6:29 AM | Reply
The US airlines brought it on themselves. If you tell your customers that the only thing that matters is price, then they will behave that way. What is even more interesting is what will happen when the economy recovers. Will passengers remember the nickel and diming and go with airlines that treated them better during the bad times, or will they still only consider price? I personally have a long memory.
Any thoughts on calls for the Government to get involved? The airline industry was, after all, deregulated - should it not just fend for itself and allow the strongest to survive and the weakest to perish? All questions that will no doubt be debated as US carriers continue to slash jobs and capacity.