Do you think the major airlines are going to go out of business soon?

Question

Only thoughtful answers that explain your position will be considered for best answer.

http://news.yahoo.com/s/aviation/airlinesfacetheabyss

Answer 1

I look for airlines to cut short hauls.

Possibly any distance up to a days drive by auto.  About 500 or so miles.

Primary cities only.  Landing fees are no small amount.

This will be tough on some existing airports.  There may be smaller aircraft shuttles to service those.

I remember when some routes were a piece of c**p trying to fly out of small cities.

That will accomodate business travelers although they will have to rent a car or take shuttles for surrounding excursions.

It's probably the only thing that will produce adequate fares.

I'm in Houston, Tx.  Consider the time needed to fly from Ho. to Dallas.  240 miles.  With hassles, about 3-4 hours.  Flying time, about 45 minutes.  Then rent a car.  One can drive 4 hours.

I've flown from Little Rock to Houston.  440 miles.

Arrived in 7 hours beginning to end, with hassles.  

Then rent a car.

I've driven it many times 7 hours.  Could be less.

Answer 2

The way I feel is this, unless there is a major reversal of the oil prices.  There will be three to four major airlines and a hand full of LCC(Low Cost Carriers).  For the majors the Delta - NW which ever name is finally used.  American, Continental and US Airways.  For the LCC's Southwest and Virgin America maybe AirTran.  The rest just don't have the cash reserves to last.  Even mighty JetBlue I don't think will last much longer before we here of them filing for Bankruptcy.  Look at the industry as a whole, tens of thousands of layoffs mothballing or selling/lease return older and less fuel effective aircraft.  I do think the industry will survive as a whole but with a lot fewer airlines and aircraft in the air.  Just like after the boom of deregulation and the collapse of the early and mid-80's.

Answer 3

Nah, the airline industry is still thriving.  Stories like this are put out for a few reasons.

1. the author of the article only looked at the failing airlines.  Didn't talk to people from the ones who have nearly sold out flights all the time.  it's airlines like United who are failing (because, they just don't know how to run a proper business and treat customers right) and American Airlines who have screwed customers over so much in the past few months by grounding all these flights because they left plane inspections to the last second.  It's these airlines people focus on because they are HUGE names.  So if they fail peopel assume everyone will.

2.  Some airlines put out false information.  If people think the airline industry is going bankrupt then they won't be as angry when they have to pay more.  The companies don't necessarily LIE but they have very good PR people to put a spin on information.

Air travel is the quickest, most effective way to travel the world.  it will never disappear.  No one is willing to go back to the days when it took 2 weeks to get to England because your boat only moved so fast.

Answer 4

I can only really speak for the US, but:

People have come to expect to find tickets for prices that are simply unsustainable, given the airlines' cost structure.  Something has got to give.  Either airlines' CASM (cost per available seat mile) has to decrease, or their RASM (revenue per available seat mile) has to increase.  If, for a given airline, RASM < CASM for long enough, the airline's cash reserves will be depleted, and they will have to stop flying.  They may, of course, prop themselves up on loans for a while, but not very long given the current lending market.

CASM probably can't come down much more.  They're already paying their employees peanuts.  So RASM is going to need to come up.  That means higher ticket prices.  Of course, people don't want to pay higher ticket prices, and generally ticket price is the #1 factor in someone's decision of which airline to fly.  Hence all these obnoxious fees lately.

But in order for revenues to rise enough to allow profitability, the market will need to shrink.  I don't know if this can be accomplished simply by each airline reducing its number of seats, or if an entire airline needs to go out of business.  Kind of 6 of one, half-dozen of the other, if you ask me.  There will need to be fewer seats for sale, regardless of how that comes about.

As far as likelihood to fail...several smaller airlines (say, ones ranked between #7 and #12 in the US) seem like they may be on the brink of failing, namely Mesa (which operates Go! Airlines in Hawaii, and a number of ____ Express flights for various other airlines).  But among American, United, Delta, NW, SW, US, Continental...I'm guessing the number to go out of business in the next 2 years will be either 0 or 1.  That's excluding the pending merger between Delta and NW, and any other merges that happen.

Answer 5

After reading the cited article it would seem that they are going that way.  It does seem that they were already on a shoestring budget before fuel prices began to climb.

I am no expert in the area of finance or travel, but I do know how to budget and balance a check book, and it seems that the only way around this is to pass the cost on to the consumer.

Some airlines are trying to "lessen the blow" by charging for baggage, but come on, everyone minus one person who is moving who shipped all their stuff and has stuff (thanks George Carlin) at the destination city is gonna have baggage.  Why make your employees go through all that "rig-a-ma-roll"/"song-and-dance" for each bag???

The answer is they are going to have to increase prices or they will go out of business.  I think they should continue to raise the price as fuel prices do, and see how much business declines.  I think it's all they can do before they proverbially throw in the cards.

Answer 6

no