Harsh Summer Prepared Carriers For Current Global Slump

If you've felt like a sardine on packed airliners this holiday season, you might think the airlines are doing pretty well. They're not.

The Air Transport Association is sticking by its earlier prediction US domestic airlines will combine for total losses of $4-to-$6-billion in 2008. But ABC News reports the fuel-price crisis that drove many carriers deep into red ink over the summer has forced them to prepare for the economic crisis now battering many other industries.

Capacity and workforce cuts, and a host of new ala carte fees imposed to stem losses when oil hit $147 a barrel over the summer are now keeping the companies afloat during the economic slump.

And it appears much of the slump still lies ahead. ATA's John Meenan comments, "We are starting to hear some reports of advanced bookings being off significantly, and that of course, is a very ominous sign for what we could be looking at in 2009."

David Field, the US editor of Airline Business Magazine, predicts we will NOT see the airlines begging Congress for a bailout.

"The cost of oil removed their strongest argument for asking for aid," he said. "They can't go up and say, Mr. Chairman, my costs have gone up 87,000 percent, because their costs have come down."

As for the unbundling, Field jokes, "Fees are like diamonds, they are forever. I don't think fees will go away."

FMI: www.airlines.org