Three new stories serve as our daily reminder that high oil prices and a weak dollar are changing the airline industry and affecting everyone who flies.
On the heels of its announcement it is cutting 3,000 jobs, Continental today disclosed it will be reducing available seats by 8 percent in Houston and up to 13 percent in Cleveland - and it is eliminating service entirely to nine cities. (Travelers have already begun to notice things tightening up in more ways than one. I flew to and from Atlanta earlier in the week on Continental, and every seat was full on both flights - the first time I can remember seeing that on both ends of a round trip.) The seat cuts begin in August.
United Airlines is following American Airlines’ lead in charging for checked luggage, announcing it will begin collecting $15 for the first bag. United is also increasing its fees for three or more bags, overweight bags or those requiring “special handling” so that fees will now range from $125 to $250 for those items alone. The new charges will begin in August.
And, if you are ready to book your Southwest Airlines flight to grandma’s for Thanksgiving or Christmas, you’ll have to be patient. Southwest, while awaiting other carriers’ decisions regarding flight reductions, still hasn’t posted any of its schedules past October. The only airline showing a first quarter profit says it plans to announce schedules into January sometime late this month. The article suggests Southwest might actually add flights to certain destinations as competitors cut back.
Air travel is changing quickly. One wonders if flying may soon be mostly a business-only mode of transportation.
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5 Responses to “Oil prices, economy continue to vex airlines”Search
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With fuel prices being so high, I think we should encourage liberals to show solidarity and have all liberals boycott the airlines.
Congratulations to Southwest for thinking ahead.
While rest of the Airline industry is struggling due to rise in jet fuel, southwest took out an insurance policy against high jet price and today it costing the Airline $43 a barrel instead of $134 as rest of the airlines are paying.
How about CEO of this company for VP slot?
Southwest has always stayed on top of aviation issues. They are very cautious and they have business savvy executives who know how to run a competitive business.
Southwest seem to adhere to sound business principles, such as - to increase volume, lower prices, don’t raise them. Don’t fly unprofitable routes. Hedge your fuel costs. Keep your employees happy (I think they always paid above union wage so employees would have to take a pay cut to unionize). Fly to the “close-in” airport. Stay out of the courthouse - remember when they came up with the “Just plane smart” catch phrase only to be challenged by a North Carolina furniture manufacturer who had the same slogan - they settled the issue by having a highly publicized arm wrestling event between the two company chairs in a sleazy wrestling arena in Dallas, complete with scantly clad stews, cheating, faked injuries, and generally lots of fun. Sure PO’ed some lawyers though. Always watch their cash, and assumed the reason people fly is to get there quick, not necessarily to be treated like a movie star. Others might do well to check out their business model.
#2 Rahman, not that it really matters a whole lot but, Southwest’s oil hedges for 2008 are at $51 a barrel for 70% of their needs.
Anyway, the airline industry along with the rest of our economy is in big trouble. The Federal, State and Local governments just need to get out of the way and let the People solve the problem.
Regulations upon regulations upon government handouts have never solved any problems.