State of the Airlines

Friday, January 28, 2005

OPINION: Falling Behind in the Airline Industry.

All of the airlines were hit hard by fuel costs in 2004 and by the looks of it 2005 may not improve in that aspect. But the blow delivered by fuel costs were cushioned for a few airlines due to the fact that they were well hedged on fuel(fuel bought in advance at a pre-negotiated price). So why is it that the majority of airlines missed this opportunity, or at best, did not take full advantage of the opportunity to hedge agressively on fuel? To me this is where you start to delineate the smart airlines from the not-so-smart. Maybe not-so-smart isn't the right term...maybe the term is distracted. As in distracted by bankruptcy proceedings. Distracted by arduous union negotiations and the all consuming drive to cut costs. Maybe thats my point. While some airlines are able to devote their energy on "go forward" decision making others are locked in a process of "clean up" decision making. Its not that some of these struggling airlines are not making progress, its just that the progress is too slow. This is why I still believe that United Airlines and US Airways are doomed. They continue to thrash in bankruptcy while the rest of the airline industry moves on.

By the way, this opinion brought to you thanks to a discussion I had with one of the 5 people who have seen my blog (he's an employee, I made him look).