Analysts Says Fuel Costs May Sack More Carriers | Aero-News Network
Aero-News Network
RSS icon RSS feed
podcast icon MP3 podcast
Subscribe Aero-News e-mail Newsletter Subscribe

Airborne Unlimited -- Most Recent Daily Episodes

Episode Date

Airborne-Monday

Airborne-Tuesday

Airborne-Wednesday Airborne-Thursday

Airborne-Friday

Airborne On YouTube

Airborne-Unlimited-02.24.22

Airborne-UnManned-01.25.22

Airborne-Unlimited-01.26.22

Airborne Special Edition-01.20.22

Airborne Special Edition-01.21.22

ANN LIVE Coverage of AEA 2021 Is Archived at www.airborne-live.net

Tue, Jun 10, 2008

Analysts Says Fuel Costs May Sack More Carriers

Legacies Could Follow Smaller Airlines Into Chapter 11

So far, rapidly rising fuel costs have caused several small airlines to shut down or file for bankruptcy protection. The Dallas Morning News reports industry experts say if the high fuel costs continue, bankruptcies will become the rule rather than the exception, and air travelers will awake to a very different 2009.

United, American and Continental Airlines have all trimmed their fleets and schedules starting later this year. Even AirTran, Southwest and JetBlue -- which have been doing well by current industry standards -- have announced plans to scale back capacity from earlier plans.

Finance professor Harlan Platt at Northeastern University in Boston tells the paper he expects oil prices to drop, but isn't sure they'll drop enough to save the airlines.

"If you don't have an oil price of about $75 or $80 a barrel, at the end of 2009, you'll have most of the airline industry on the financial ropes," he said. "They will have run out of cash or virtually run out of cash."

Morgan Stanley analyst Ole Slorer doesn't share Platt's optimism. Slorer predicts unprecedented Asian demand will keep pushing oil prices higher, to $150 a barrel by the US July 4th holiday weekend.

Platt responds, "If that happens and if that price holds... They'll need to file for bankruptcy protection. And by 'they,' I mean most of the airline industry."

What will this mean for ticket prices? Tom Parson of Bestfares.com says a family traveling from Dallas to Tampa around Christmas, after the announced capacity reductions take effect, could pay 524 to 977 dollars per passenger on American Airlines.

Parsons says other effects will include continued service on successful routes, but cuts in marginal markets, and some small markets will lose service altogether. Those which keep service will see service catering to business fliers, not to families on tight budgets.

Leisure destinations, where airlines have to cater to price-conscious leisure travelers, will see fewer flights. Parsons says cities such as Las Vegas, with 100-thousand hotel rooms to fill each night, will suffer.

"The travel industry is going to be hurt a lot, not just the airlines," he said.

So, what's a vacationer to do? Wait till after summer. Parsons says demand is likely to fall after Labor Day, with fares to Europe down $300 to $500 from their summer peak. By that time, most of us may even to also be able to afford to drive our cars to the airport.

FMI: www.bestfares.com

Advertisement

More News

Aero-News: Quote of the Day (01.23.22)

“The New York metropolitan area has been the largest market trailing 3 years for Jet Edge and compliments our already established Signature facility in Los Angeles. New York >[...]

ANN's Daily Aero-Term (01.23.22): Line Up And Wait (LUAW)

Line Up And Wait (LUAW) Used by ATC to inform a pilot to taxi onto the departure runway to line up and wait. It is not authorization for takeoff. It is used when takeoff clearance >[...]

ANN's Daily Aero-Linx (01.23.22)

Aero Linx: Aviation Suppliers Association (ASA) Established February 25, 1993, the Aviation Suppliers Association (ASA), based in Washington, D.C., is a not-for-profit association,>[...]

Airborne-Unmanned 01.19.21: Zeva Zero Flies, UAS Taxi Outlook, Censys

Also: Masten Expands, Sonex Aerospace Sold, Collier Nominations, SuperBowl TFR Zeva has completed the first untethered flight test for its Zero flying wing airframe, where the airc>[...]

Aero-News: Quote of the Day (01.24.22)

"Wow, I can see Dubai Expo." and "Finally, here come my friends." Source: Just some of the signage that accompanied and Emirates announcement by once again placing a flight attenda>[...]

blog comments powered by Disqus



Advertisement

Advertisement

Podcasts

Advertisement

© 2007 - 2022 Web Development & Design by Pauli Systems, LC