The Fate of the Airline Industry?

It's bizarre. They just can't make money....yet travel is way up...and prices are way down (I paid more for tickets 15 years ago). It's like competition without sense. Continually undercutting eachother for market share -- yet only the niche players can make a buck.

 

Southwest still burning $50 dollar a barrel oil from previous hedges. Wonder how long until that tap runs dry.

Wonder why every other company didn't do the same.

 

Some of this is just the reality of the costs of the industry, but some is just airline incompetence as well. My favorite example was when AA (I think it was them) announced the "more leg room!". Basically, they took seats out of each plane, lowering their revenues per flight.

The theory, I presume, is that they would get happier customers and thus more market share. However, there are two ways it would play out. One, it doesn't really attract more customers, and the result is you just basically have lower revenues. Two, and the way it did play out, is that it IS appealing to people, so all the other airlines follow suit in order to not lose market share, and now ALL the airlines have lower revenues per flight, but none of them have more customers.

The airlines do this kind of stuff all the time, and it's pure stupidity.

 

I believe they are hedged for all of 2008 and part of 2009.

 

Isn't jet fuel a lower grade than the stuff we put in cars? shouldn't it be cheaper?

 

I think they are doomed unless some new technology comes out that allows planes to use renewable energy like solar or something

The cost of energy over the next 20 years will destroy them. The prices are already ridiculous.. If i decide I want to to California for the weekend, the flight will run me 800 bucks. The common man cannot afford 800 bucks.

I think the future of travel is the high speed electric train. Top speeds for these things are getting close to airplanes also.

 

Is this feasible for the states, I mean other than the most densely populated areas in the Northeast? The country seems a bit too big for a high-speed railroad network.

 

They will eventually be consolidated into one company, at which point the federal government will take over air travel. USPS will be tasked with running operations; instead of mail cargo it will be human cargo, and service will be just as bad.

 

I fly to NY frequently and I'm definitely paying MORE this year than last year. A round trip from IAH to EWR last year 14 days in advance was $236-248. This year I'm paying about $358 Round trip.

 

I believe jet fuel has doubled in price over the last year... DOOMED ?

 

I've been in the U.S. airline industry over 20 years. Jimmy Carter's deregulation, while a very good thing for the traveling public and the U.S. economy in general, has created a dysfunctional industry that repeats the same mistakes again and again when it comes to making a profit. One of the bottoms lines is the flying public must realize you get what you pay for. The only thing guaranteed is safety. If you wants meal and snacks and a blankie, forget it. The competitive marketplace has determined the flying public wants low fares more than anything. People who whine about poor service should either drive or pay for first class. Nobody is forcing them to pay the lowest fair.

 

I beleive so as well
just gonna take someone with the pull to pull it off

I've been an advocate of running one
between Austin - Dallas - Houston

Rocket River

 

You can blame Southwest Airlines intense lobbying effort for that specific thing not happening. Those lanes are their cash cows and they don't want the competitionn.

 

That's the way I see it playing out as well.

 

This is a ridiculous notion. Worldwide, airlines are moving AWAY from government subsidies and ownership and have been for several years.

tigermission1, I assume you were being sarcastic and this guy missed it.

 

I didn't miss anything. It seems like a plausable route given that it seems that so many companies will seem to have to merger to turn profit. What happens if oil hits $200 a barrel? I think subsidies could come back into play and who knows what else at that point.


What we need is rail and to quit depending on f-ing oil.

 

Seriously, the U.S. government won't be nationalizing the U.S. carriers. There is nothing plausible about it. What makes you think mergers will cause them to make a profit? The problem is way too much domestic capacity which prevents the carriers from raising prices enough. A combination of cutbacks, bankruptcies and/or a large carrier going out of business will resolve the issues enough.

 

Planes can run on something other than oil someone can just come up with it.

 

I'm sure stupidity runs in all industries, but...

I own a Seattle's Best coffee shop in 1600 Smith in downtown, Houston. This is the headquarters of Continental Airlines. I have two years remaining on the lease and actually do quite well at this location.

A couple of weeks back I got a phone call from the building property manager (Brookfield Properties). I'm pretty cool with him and he called me up to the office. He tells me that the CEO is putting pressure on Brookfield to get a Starbucks in the building. Which means we would get kicked out. Oh by the way did I mention Seattle's Best is a subdivision of Starbucks and everything except the coffee bean is the same exact product.

The CEO's secretary "hates walking 2 blocks to the closest Starbucks" according to the property manager. So the CEO is constantly calling the VP of Brookfield in Houston to get a Starbucks within the building. Starbucks has already said no in the past.

Brookfield has to oblige to the request or at least do their best because Continental is a major tenant. Of course the cost of building out said Starbucks (close to $200K) would be past along to Continental Airlines. Of course the CEO of Continental does not care about that.

Another example. Their offices are on the 19th floor. This floor is serviced by 12 freakin sets of elevators!!!! Once in a while 1 out of 12 elevators will be in need for repairs. Well the CEO of Continental has told Brookfield not to make the repairs during business hours. They don't want to "wait" to get up to their office. If its repaired during business hours then Brookfield covers the cost. Average cost of repairing an elevator is $20,000!!! CEO (I don't remember his name) of Continental tell Brookfield to make repairs after 5 or over the weekend. Hello overtime for elevator company!! Cost is boosted to $30,000 and billed to Continental because they are idiots and just dont care.

The Brookfield guy told me of various other stupid things Continental is having them do, but I think yall get the idea.