June 7, 2008
What comes next for airlines?
The US airline industry is in trouble. US airlines saw a combined profit of $5 billion in 2007- not bad but not enough to make up for the $32 billion lost over the previous six years...
And turning a profit in 2008 looks like it will be tough: routes are being cut and prices are going up.
United Airlines is making cuts. 1,400 to 1,600 jobs and 14% of domestic flights.
Continental Airlines is making cuts - 3,000 jobs and 8% of its flights.
Silverjet has failed. The article blames the business model of "low fare business class airlines" where "attracting passengers was not a problem but obtaining sufficient revenue from those passengers to make a profit was." Customers who don't have a credit card company willing to fight for them will lose their money (but doesn't everyone pay by credit card?). It reminds me of this Mancunian article.
So what is next for the airline industry? Industry analyst Michael Boyd expects U.S. fares overall to rise 15 percent this year. Many people expect mergers, but this pilot says they are no the answer. So what is the answer?
Posted by James Trotta at June 7, 2008 11:53 PM | TrackBack