State of the Airlines

Thursday, January 06, 2005

Opinion: Bankrupt Airlines and Overcapacity

People are questioning Delta's decisions to simplify and reduce fare structures. Some are going as far as saying that it is forcing an airfare war that is unhealthy for the industry. I say bull. Delta is adopting a new business plan, plain and simple. The real problem is not airfare wars its chronic overcapacity...basic supply and demand. So, sadly, we need a couple of majors to leave the industry. The human impact is grim, thousands of employees are going to hit the bricks in search of a new job in an already tight job market. This is made worse by the number of specialized individuals working in the industry. I feel for these folks and having been laid off twice in my airline career I do understand. But it must happen. Market forces demand it and these forces almost always win.