Tue, Apr 13, 2004
NWA: Fuel Prices Slowing Airline Recovery
We already know how much it hurts to pull in the gas station and
say, "fill 'er up" (at least, those of us who either have willing
and able children or are in the habit of talking to ourselves). Now
imagine that means pouring thousands of gallons of Jet-A into the
fuel tanks of a commercial aircraft and calculate the cost.
Therein lies the rub for commercial carriers just now struggling
to emerge from a three-year long economic slump. Now you know
what's going through Richard Anderson's mind. He's the CEO of
"Having the highest fuel prices since the 1990-91 time frame is
very difficult for the whole industry," Anderson told the
Minneapolis Star Tribune.
Anderson and his counterparts at
other major airlines had hoped this would be the year they could
wash the red ink from their hands and start the climb back toward
profitability. With fuel prices at high -- sometimes, record --
levels, those prospects have dimmed a lot.
"It has a dampening effect on our important customer base,
particularly here in the Midwest, because everyone is paying much
higher prices to take their goods to market, to heat and power
their plants and facilities," Anderson said.
The tremendous jump in fuel prices dims the bright spots on the
commercial carrier landscape. The economy is improving and a lot of
companies that laid off workers during the slump have started to
hire again. But then, there are the low-cost carriers with which
Northwest must compete. They now control 25-percent of the market
and have so far been able to stave off fare hikes run up the
flagpole by legacy carriers over the past couple of years.
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