State of the Airlines

Friday, January 07, 2005

OPINION: The Fare Cuts Everyone Loves To Hate

Man...I just CANNOT get off this subject. Every bandwagon analyst out there is basically calling Delta's plan to re-work their fare structure the bane of airlines and apparently the catalyst for the down fall of airline civilization as we know it. So let me get this straight. First, the analysts scream that the majors need to revamp the way they do business to compete with the discount airlines. Cut costs the analyst said and Delta responds with a brutal round of cost cutting. So why is it that these same analyst grab their axes and pitchforks and decide to lynch mob Delta for taking the next step to emulate a simpler fare structure favored by the discount carriers? I really MUST be missing something. If Delta can make money with this plan then they win...those that cannot compete lose. Tough bounce. The airlines that are going to fail this year (United, US Airways, Aloha) have SO many more problems than airfares. You simply cannot try to blame Delta for their imminent demise.

Here's a great quote for no S**T files,

"BB&T Capital Markets on Friday upgraded Southwest to "buy" from "hold," saying the nation's most profitable airline is best insulated from Delta's plan.

"We expect little or no revenue impact for Southwest," analyst Anthony Cristello said."" Source: CBS MarketWatch

Maybe that's because Southwest is already doing what Delta aims to do? So why would it impact them?