Gas prices are shooting down Airlines..

[Chris D.]

This is a major sign..

Someone needs to step in and get these prices down or its going to choke the US down to 3rd world status..

http://money.aol.com/news/articles/_...05103009990001

[bennelson]

Europe has much higher fuel prices, and they have airlines running productive businesses.

I think that American companies have taken too many things (like federally subsidized fuel prices) for granted for too long.

It's tough for companies to change quickly for whatever is going on in the world.

Long run for airlines in general doesn't look good though. Prices will only continue to go up and flying with come to be more and more only for the wealthy.

[Ryland]

So what you are saying is, if we don't do something we are going to have to stop wasting so much? something needs to be done so we can continue as we have been?

my boss also works for an airline, and thinks that if anything, this is pushing for airlines to update to more efficient planes, and that people are flying just as much as ever.

[trebuchet03]

Originally Posted by Chris D.

This is a major sign..

Someone needs to step in and get these prices down or its going to choke the US down to 3rd world status..

http://money.aol.com/news/articles/_...05103009990001

You've got it backwards... The US economy is already choking - so low dollar value = more dollars for fuel... But the global value hasn't changed so much....

Not saying the word recession doesn't make it go away...

[roflwaffle]

From 120 in early 2002 to 72 currently we've seen a 40% drop in the buying power of the US. Granted, this doesn't translate uniformly across the board, and should serve to pop us out of the service industry oriented economy in the long run, but it's still huge.

[cfg83]

Hello -

I really don't believe in the economic model of US airlines. I wish I had the article, but here is the gist. Normal business models assume that a company can safely carry a 30% debt load. The US airline industry typically has twice that, i.e. a 60% debt load. The only airline that maintains the "normal" debt load is SouthWest airlines. Here is an (out of date) article that tangentially agrees :

United's future in limbo - 9 December, 2002
http://news.bbc.co.uk/1/hi/business/2547219.stm

Profit nightmare

More crucially, large commercial carriers, such as American, Delta, Continental as well as United, carry huge debt loads - as much as 70% of profits.

A lone passenger arrives for a flight at Chicago O'Hare International Airport on Wednesday.
United's home base is at Chicago O'Hare airport

An industry as volatile as the airline industry that is susceptible to such tragedies as 11 September should not be financed with that kind of debt load, says Professor Gritta.

In the case of United, with its employee owners, it has led to huge swings in profits, which leads bondholders and Wall Street to view the airline as a risky investment.

"What you get is a nightmare if revenues start to fall," Professor Gritta says.

Here is more on Southwest :

SouthWest Airlines Case Study: History and Analysis - Aug 4, 2005
http://www.echeat.com/essay.php?t=27535

... The reason for Southwest Airline's success is due to their low-cost model. The Southwest Airlines consists solely of Boeing 737s and offers only coach seats (there is no business or first class). Southwest Airlines also do not offer in-flight meals, only peanuts and other snacks. Southwest is simple and direct at the goal of their service; "a primarily short-haul airline that flies directly from city to city, with just one type of plane--the Boeing 737 - and the lowest costs". With a simple goal, Southwest has excised many of the "luxuries" that competitors have offered, such as luxury seats; this is made evident by their decision to enforce a rule for passengers who could not fit into the seats to purchase an additional seat. This rather unpopular move (whereas other airlines would have suggested a more luxury class seat) is simple in its purpose-get passengers from point A to point B. Services, such as in-flight meals and luxury seats, which have become standard to competitors, have been seen as unnecessary for an airline that provides a short-haul trip from city to city at the lowest cost. To have opted for a first class, business class, or any form of luxury class seat would have been excess baggage; most people would prefer to do without it if it meant for cheaper ticket price. ...

CarloSW2

[Lazarus]

One of southwest biggest factors was that because they did not pay there personal as much as the other majors they were more profitable. Because of this they had more cash on hand and were able to hedge fuel at a greater amount then those that were strapped for cash. When Jet fuel started to skyrocket they were locked in a great price and the other majors were suffering. Southwest still has a great business model that the other are now trying to follow. Here's an article back in 2005 when prices were starting to get out of hand with Jet fuel.

Hedges also cost money, like any insurance. Some cash-strapped carriers, like Delta Air Lines, have sold their hedges to raise money. Other U.S. carriers, including Continental Airlines, Northwest Airlines and US Airways Group, are opting to forgo hedges and pay market prices for fuel this year. Profitable, low-cost carrier Southwest Airlines still hedges aggressively, however.

Someone needs to step in and get these prices down or its going to choke the US down to 3rd world status..

I have seen the enemy and it it us!