The FAA and other international organisations are STILL projecting massive increase in air travel over the next ten years. I suppose the questions are, Who will be around to fly these people and can it be done at a profit?
Yes United can shrink into survival but it is like the old military maxim which appears in various forms "a retreat is by far the most difficult military manoeuvre to perform". By deferring new aircraft, USING as many of its old aircraft that it MUST make the payments on. Reducing costs in various ways, many of which it has not yet even considered, United can compete. United needs to survive until the inevitable turn round comes.
Talking of the inevitable turn round a few factors come to mind. The present conventional wisdom, still expressed, is that somehow terrorism is still preventing people from flying. Absolute , pure, unadulterated BS. Terrorism was a catalyst which greatly accellerated an inevitable situation. Without terrorism the airlines may have been able to make a gradual transition into the new airline business reality. Frankly I doubt if they would have done so. Airline management has been so short sighted and so locked into their outdated thought processes that without terrorism we would still have seen a steady decline in the industry. The present slow down in the US travel industry is psycho-economic. Fear and indecision. What must be faced is that, with a few exceptions, the management of US businesses and US politicians are actually no smarter than the management of the US airlines. A frightening thought. Let us face it though. These people come from the same business schools. They got their positions through being part of the same "in group" or through massive ambition. Why should the reaction of these people to an economic down turn be any different to the reaction of airline managers? Cut, slash, reduce costs, reduce travel. Chase the years old dream of business all done by computer and telephone - who needs face to face contact? The present slow down in business travel is an ECONOMIC problem, a mindless CUT, CUT, CUT reaction that is inherent in this generation of business leaders.
The present situation is that the "average joe" is travelling because he can see airline ticket prices are a bargain. The average business traveller is not flying because he has either been told not to do so by his company or he is reducing his travel to a minimum, either way the business traveller is looking for the cheapest ticket. Despite what we hear from the uninformed Press airline load factors are not bad in classical terms, it is just that the ticket prices are not producing enough revenue. It is certainly a great idea to ensure your employees travel economically if they must travel. The business problem with the present mentality is one of bean-counting. It is easy to account for travel costs, it is very difficult to account for lost business due to lack of face to face contact and it is very difficult to account for the productivity lost whilst employees search for the lowest price airline ticket.
When businesses realize that it is counterproductive to restrict travel and when they realize that the absolute ticket price is not the only criteria for travel costs the airlines will see some measure of inprovement in their income. However, the only real improvement will take place when, in addition to the above, the supply of seats is reduced to meet the demand. This will need a rethink in the way the whole airline industry operates. As a previous poster says, it was great before deregulation, this was simply because supply was restricted artificially.