Gloomy Industry News

Jun 12 2009 Gloomy Industry News BY admin TAGS Fares

 

Wow...what a mixed bag of news. While things are looking up at our airport (witness our May passenger numbers), the outlook for the airline industry is decidedly gloomy. Cases in point:

 

  • American Airlines is cutting 1,600 jobs. Bloomberg reports, "American’s reductions equal about 2.4 percent of the workforce...The cutbacks in flights and jobs announced yesterday may herald similar steps by other U.S. airlines. Revenue is vanishing as they trim fares to lure customers who are flying less because of the recession, especially in premium-class cabins on overseas routes."
  • Oil prices are going up in a big way and that's got the airlines sweating bullets. The Chicago Tribune reports, "The run-up in fuel costs was a hot topic at United Airlines' annual shareholder meeting Thursday as Glenn Tilton, United's chairman and CEO, called on President Barack Obama and Congress to clamp down on "excessive speculation in the commodity markets." Tilton also was grilled by a shareholder over his airline's effort to hedge against wild swings in oil prices last year."
  • And there's this bit of news this afternoon from Reuters: "Plans by major U.S. airlines to slash the number of seats they sell may bolster fares this fall, further stabilizing prices that tumbled this year as economic weakness drained travel demand."

So you see, what's good news for us (low fares and rising passenger numbers) is bad news for the airlines. Air fare will almost certainly start going back up. As the saying goes, buy now or pay later.

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