State of the Airlines

Monday, January 24, 2005

NEWS: 2005 - Here Comes the Pain Part II?

Industry watchers are already saying that the 2005 results for the airline industry may be worse than 2004. How much worse? Like triple worse. Ugh, another year of huge losses? Where does it end?
The reasons cited are our old friends, oil prices and brutal competition and overcapacity. Oil prices? On the surface this would seem like something that would treat (or perhaps abuse) every airline to the same degree. Not true, those airlines who hedged big on fuel will be better off (yes Southwest Airlines I'm talking about you again, quit gloating). Brutal competition? Major airlines are still reeling trying to go through the great reformation that will allow them to compete with the low fare carriers. Delta Airlines stepped up by being the first major carrier to actually do something besides cutting costs. They have taken the next step by dismantling their antiquated and bloated fare structure. Other airlines need to get moving. Overcapacity? Supply and demand plain and simple. The 4 people who have read my blog know how I feel on this one. We have too many airlines and the bankruptcy courts are keeping it that way. Some airlines have gotta go and soon.