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By the end of the year, global airlines will have cut 7% of their passenger capacity. According to The Guardian, "Experts predicted even deeper cuts in 2009 as part of a prolonged retrenchment of an industry that has expanded rapidly in recent years."
On the face of it, none of that is news. Airlines are losing billion of dollars due to oil prices, which are almost double what they were a year ago.
If worldwide seat capacity is eventually lowered 10% to 15% in an attempt by airlines to keep themselves out of bankruptcy, two things are almost certain to happen. Planes will become full instead of flying at 60% or 70% of capacity. Fares will almost certain rise as quickly as the price of oil did. These trends should help airlines rescue their earnings.
The trends may make is significantly more difficult for middle-class consumers to fly. This part of the population is already squeezed by falling home prices, high commodities costs, and the possibility that lay-offs in a number of industries will accelerate.
Some people may not make it home for the holidays.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
8-10-2008 @ 9:49PM
Larry said...
People do not need to travel as much as they due. With Computers, Fax, Blackberry, Video conference, Telephone most sales calls could be made. The trouble is that the people responsible for all this travel are doing it so that can go somewhere on their customers dollar. Have you ever noticed that all the conventions are held in places likes New York, Florida, Vegas, Hawaii, and the like? These meetings should be done in some out of the way town in the middle of the USA with no Golf course, nightlife and so forth, that way it would cost less. Do no Fly it cost to much money and takes to long to get through security.
8-11-2008 @ 12:38AM
Peter Sklar said...
The real problem with the airlines is that they lie. And lie. And lie. About everything. They lie to their employees, they lie to their customers, they lie to the media...You cannot get a straight story from the airlines about anything. Not about delays, not about pricing, not about ticketing policies; (my friends and I have a standard procedure- every time we call and ask a question from an airline and get an answer we don't like, we hang up, call back, and we ALWAYS get a different answer.) Now they're charging for water? I'm sincerely surprised they haven't invented a specific justification for it- like they can only take a certain amount of drinking water on board, and they need it to lubricate some of the hydraulics, and if people drink too much...etc. One word, people: DRIVE! Door to door it's often nearly as fast- faster with the 51% chance of delays- no moronic 3.5 oz "security" bullying, no nickel and diming, pack what you like, the way you like, leave when you like, stop when you like.. breath cleaner air, drink as much water as you like, get there a lot more relaxed, and even with gas prices, you'll still come out ahead financially. And you'll have the satisfaction of watching the airlines squirm as fewer and fewer people tolerate what is fundamentally the most dishonest and inept industry in America.
8-11-2008 @ 12:39AM
Peter Sklar said...
The real problem with the airlines is that they lie. And lie. And lie. About everything. They lie to their employees, they lie to their customers, they lie to the media...You cannot get a straight story from the airlines about anything. Not about delays, not about pricing, not about ticketing policies; (my friends and I have a standard procedure- every time we call and ask a question from an airline and get an answer we don't like, we hang up, call back, and we ALWAYS get a different answer.) Now they're charging for water? I'm sincerely surprised they haven't invented a specific justification for it- like they can only take a certain amount of drinking water on board, and they need it to lubricate some of the hydraulics, and if people drink too much...etc. One word, people: DRIVE! Door to door it's often nearly as fast- faster with the 51% chance of delays- no moronic 3.5 oz "security" bullying, no nickel and diming, pack what you like, the way you like, leave when you like, stop when you like.. breath cleaner air, drink as much water as you like, get there a lot more relaxed, and even with gas prices, you'll still come out ahead financially. And you'll have the satisfaction of watching the airlines squirm as fewer and fewer people tolerate what is fundamentally the most dishonest and inept industry in America.