“A severe downturn could be just the opportunity the airline sector needs to clean up its act once and for all, said Robert Crandall, the former chief executive of AMR Corp.’s American Airlines and a veteran of the industry, on Tuesday.”

That’s the lede in a story from MarketWatch.

Crandall is quoted, “The events allowed for a needed capacity reductions that wouldn’t have happened otherwise.”

The key word in all this is “opportunity.” Now that the airlines have been forced to reduce capacity (number of available seats), will they resist the temptation to add more once economic recovery begins? This, you see, is the heart of the matter. Until very recently there was a huge supply of seats. This resulted in cheap fares—so cheap that the airlines really weren’t making enough money to stay healthy.

Now that they’ve cut supply, they should be able to keep fares high. But if history is any guide, some airline will start doing so well that it will think, “Hey, if we add more seats we can make more money.” Problem is, other airlines will follow: supply goes up; fares go down; airline bottom line suffers.

Read the rest of the MarketWatch story here.

“In recent weeks, airfares for the winter holidays have dropped an average of $16.” So says the travel web site Travelocity. In a press release Travelocity also says, “Softening prices indicate the first meaningful decline in the cost of flying in years and should lead to some good deals.”

“The first meaningful decline in the cost of flying in years?” Don’t know about you, but that seems like a stretch to me!

Read the rest of the release and make up your own mind.

News this morning from the Delta/Northwest buyout front…

The Minneapolis Star Tribune reports, “Executives from both carriers use the words “thoughtful” and “methodical” to describe the gradual approach they are taking to roll out changes for their passengers and employees. They are determined to avoid the high drama and dislocation that characterized the fractious combination of Northwest with Republic Airlines 22 years ago, which was the industry’s biggest merger at the time. Aggravated passengers lost their bags and their confidence in Northwest and embittered union employees battled for years to resolve pay and seniority issues.”

Read the rest of the story here.

A couple of news stories jump out at me this morning.

This one from the Arkansas Democrat-Gazette delves into airline economics. Think airlines make money hand over fist? Think again. On the soon to be cut flight between NW Arkansas and Los Angeles, American Airlines “was taking in about $ 10, 500 per one-way flight…they needed $ 16, 750 to break even. That was a flight into a financial black hole.”

Then there’s a story in the St. Louis Post Dispatch concerning MidAmerica St. Louis Airport. Ever heard of it? It’s in St. Clair County, Illinois and is part of the greater St. Louis metro area. Built in the late 1990s, it has confounded the national aviation community since because no can figure out why the county would build a “commercial airport” so close to St. Louis Lambert International.

The head scratching continues. The Post reports, “Allegiant Air says it will cancel its twice-weekly service to Las Vegas from the airport…on Jan. 3.” According to the paper the airport has had four airlines come and go since 2000.