Goodbye Columbus... not the book by Philip Roth
 

http://www.usatoday.com/travel/news/...shutdown_N.htm

Very sorry to hear about S/B. Alot of good people put their hopes, dreams, and hard work into Skybus. Wishing those guys and gals good luck in finding positions else where in the world.

I'm sorry to hear about Skybus but they launched at the wrong end of the financial cycle. Even though the Sub-Prime problem had not emerged at launch (May 2007), it was clear that finances were down.

saccadeYes. I know all that and did not say otherwise. ALL airlines are going to suffer in the next two years. The ones in the US and Europe probably rather more than elsewhere.

Mercenerary PilotI do not think that there will be sufficient numbers to keep carriers going. The corporates will shift down to Economy for short and medium haul and expect the Premium Economy to be popular for long haul. The LCCs will pick up more from corporates but then they will also lose more off the bottom end of their clients.

If a global bank lays off, say, 5,000 staff then those that used to travel for work are not even going to be in Economy!

Many more mergers and takeovers will happen. How are Delta and North West getting along? It looks as if they got talking just in time, although rationalisation will still be required.

Dumbest Competitor
 

Whenever there is a little oversupply, the price falls to the level of the dumbest competitor.

Jet Blue is now offering coach seats with about four inches more pitch/legroom in the forward half of the plane, at about $5 per hour premium. The majority are not paying it. All the bags must be going in the forward pit.

GB

Kingfisher will get their A320s early in that case !

1978 Airline Deregulation Act has nothing to do with the latest airline failures.

In a free market, airlines have an opportunity to live or die. Well managed airlines stay in business; poorly managed airlines disappear.

Why would the likes of idiot SkyBus managers who sell $10 seats and then go belly up need to be "protected" by a regulation?

Long live capitalism and the freedom to succeed and to fail.

glueball, you miss the point
 

if the airlines were still regulated, a "skybus" would have never flown.

then there would have been no downward pressure on legacy carriers to skimp on mx and the like.

it would be a stable industry, with stable jobs, stable profits and good service.

capitalism is just fine...when it is true capitalism.

I am of the era where the phone company, electric company, airlines, were regulated. And it all worked just fine.

Now, things are falling apart.

Yes, sevenstrokeroll, I think I now see more clearly where you are coming from. The stable management of utility services brings wealth to a country. In the UK, we introduced a 'light touch of regulation' in the 1980s from the then Conservative government. What that has translated into today is - almost no regulation at all.

Air travel is now - almost - a utility like water and electricity, as it is a fundamental component of modern life. In earlier days, first the coaches (horse, then motor) and then the railways were regulated so as to be fair to all. Airlines were never fair to all, they were regulated to be safe. Now - other than arranging bilateral agreements - they don't regulate at all. And you are right, it ain't working. Unfortunately, before it can be repaid - it has to actually break down and almost stop working. That is human nature.

Yes PAXBOY, you have the concept.

But, when REGULATION was in effect for the US airline industry, things were "fair".

When an airline lost money, the regulators allowed new routes and new fares to make sure the airline stayed in business.

When things got really bad, a fair merger was implemented with a healthier airline.

Small towns got very good air service for reasonable fares. Fares were adjusted on long haul routes to offset loses on short haul routes.

Slots at airports were controlled and landing and takeoff limits were controlled to make sure delays were under control ( wx aside).

In the good old days for example, small towns like Visalia, California rated regular service with B737 aircraft by United Airlines. Now the town is lucky to get small regional craft.

It might be very hard to understand in europe, but the cities of the American West are very far apart. Airline use is vital to connecting such cities.

Now, I'm not a fan of Musolinni...but he made the trains run on time.

a little regulation is good. too much and you get something you really don't want.

oh well, I'll drive when I have to. More control than flying! (in back that is)

PS
 

when the airlines were regulated in the USA, it was said the Civil Aeronautics Board actually determined the size of ham sandwiches served on luncheon flights.

now you don't get any sandwiches.

that's progress?

Cutting Corners
 

G-ONADS

"Get your facts right please. Southwest has not cut any corners and is committed to bringing a safe and reliable product to its Customers"

I guess you haven't been keeping up with the news lately. The 10.2 Million dollar fine against them (The highest fine "ever" for a US airline) says otherwise.

Pilot wages have no affect.
 

Interesting to note that the carriers that have gone out of business this past week have all been on the lower end of pilot wages and work rules.

Pilot wages will not affect the survivability of an airline. The Legacy carriers aren't going anywhere. Maybe one will go bust. They have economies of scale that will allow them to ride out a downturn.

The airlines that will be in trouble are the ones receiving new airplanes. They have payments to make and cannot just park them to ride out the storm.

holiday pilot seems quite right...twice in a row.

my airline had a choice of refurbishing its fully owned fleet of jets or buying a new fleet of A320 types.

we did the later.

And went bankrupt twice.

but continues to fly.

another airline made the refurbishing choice and only went bankrupt once.

there you go! ;-)

Figure in the credit crunch for Aloha, ATA & Skybus. All three could not get access to any new funding!

You'll see some large & smaller carriers in the USA get hit the same way until credit becomes more available.

Excerpt from an article in The Independent about George Soros, 6th April 2008. http://www.independent.co.uk/news/bu...ng-804978.html

In his new book, The New Paradigm for Financial Markets, he notes grimly that "the over valuation of the Euro and Sterling is going to hurt European economies".

Mr Soros's main concern, though, is for the dollar, whose status is being eroded by the credit crisis, pushing up import prices and causing a dilemma for those who want still more interest rate cuts to stimulate the US economy. "The Federal Reserve is constrained by the reluctance of the rest of the world to hold dollars," he said. "We face the double jeopardy of recession and inflation."


Echoing the themes of The New Paradigm, Mr Soros said: "Regulators have abandoned their duty by letting markets regulate themselves. It's because a market fundamentalist ideology has come to dominate the behaviour of market participants and market regulators over the past 25 years ... and the idea that markets are best left to their own devices became policy."

Says it all.

Pricing Power?
 

You would think airlines would be able to pass the higher cost of fuel onto the passengers. In economics I believe they call it PRICING POWER. Perhaps they would rather go out of business then try to raise ticket prices?

If you are losing 1 dollar or pound per passenger then there is no way you are going to make it up on volume.

Airlines need to raise ticket prices or go out of business.

UPS and FEDEX can raise prices for boxes. so, people aren't worth as much as boxes?

what a world??!

I'm not sure the likes of Skybus (and perhaps Aloha/ATA) would have gotten new funding even if the economy was in good shape.

ATPMBAWhilst there are enough carriers still around (legacy or LCC) they cannot do that. The standard process for carriers will be to have their prices as low as possible and chase the pax. It is still a buyer's market - but not for very much longer.

Once the recession is in full swing, a number of companies will fail and be either bought out, or just their customers picked up, also total pax numbers will fall a great deal. By the time it is all over - probably take another 24 months for the worst of it - then we will see what is left and prices may very well be higher. Capacity will also have been reduced significantly.

The Story continues
 

Now Frontier - Part of an article from USAToday

"DENVER (AP) — Frontier Airlines (FRNT) said it has filed for Chapter 11 bankruptcy protection, but unlike other airlines filing for bankruptcy this month, it plans to keep running while it reorganizes.
The low-fare carrier said its filing Friday came after an unexpected attempt by its principal credit card processor to start withholding significant proceeds from the sale of Frontier tickets, which threatened to hurt Frontier's liquidity.
The Chapter 11 filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing its "holdback," Frontier CEO Sean Menke said.
"By filing for Chapter 11, we will now have the time and legal protection necessary to obtain additional financing and enhance our liquidity. Fortunately, we believe that we currently have adequate cash on hand to meet our operating needs while we take steps to further strengthen our company," Menke said in a statement."

Pete

Frontier
 

Frontier stated they will continue to fly but I thinlk passengers will not book flights with them out of fear of being stranding if they do decide to stop all flights. Pax would rather book with a "stable" airline.