State of the Airlines

Wednesday, April 06, 2005

NEWS: Air Fares, Traffic, Oil and Pay

Legacy airlines continue to inch up airfares pretty much across the board and traffic continues to hit all new levels. This is normally news that will cause even the most staid bean counter to dance with joy...at least a little. Unfortunately, the school yard bully known as oil cost continues steal everyone's lunch money and generally leave little room to celebrate. So what's next? You guessed it...salary reductions, benefits cuts etc. Many airlines like United, US Airways and Delta are already looking for more ways to cut costs. The question in my mind is how many more times can they go to this well before coming up dry?

The legacy carriers absolutely needed to tighten up their operations and trim costs. Things were just a wee bit out of hand. But after 2+ years, reducing staff levels, chopping pay rates, cutting benefits and outsourcing work its time to move on. You've done about all you can do here without doing permanent damage to your ability to provide an acceptable level of service.

I do not feel that the airlines have been aggressive enough with trying to increase airfares. Seriously, I have never seen such a sheepish lot of big businesses. A $10 dollar increase in fares is news. Annoucing a fare increase makes these guys more nervous than a teenager trying to ask someone out for the first time. Make with the revenue already!