If ever there was an industry that lives in a highly volatile world, it is the airline industry in the United States. The conditions move fast and the sight of airlines going in and out of bankruptcy is so common most people don't even bat an eye any more. That being said, 2009 is shaping up to be a rough one.
How screwed up is the airline industry in the United States? By piling crisis upon crisis, the airlines might actually be better prepared for economic hardship than most other consumer based industries. How can this be?
Oil prices were skyrocketing early in the summer of 2008. By their very nature, airlines were highly susceptible to these high prices. To stay in business, they reacted by coming up with additional expenses customers had to pay. These ranged from per bag charges to...well, anything they airline could get away with. Still, many smaller airlines failed, some in legendary ways such as just stopping on runways and letting people out!
Well, here is some big news. Oil prices are way down. From the highs of $147 a barrel, prices have fallen to the forty to fifty dollar a barrel range. They will probably continue to spiral down as demand continues to drop. So, that means airline ticket prices are coming down as well, right? Nope. The prices are remaining the same and even rising. How can this be?
In a moment of pure synchronicity, the airlines cost structure has run from one crisis into another. Whereas oil prices are now easing, booking problems are rising dramatically. Simply put, there are fewer people flying. This means planes have fewer seats filled. The cost per physical person on the plane thus goes up and we are back to where we started - the airlines have to charge extra to make up the difference.
If you intend to travel by air in 2009, you should do so with great caution. Airlines live on the edge of the fiscal knife. A bad month can wipe them out. This means you should be very hesitant about buying tickets months ahead of time. With the first quarter of 2009 shaping up to be an ugly one on the fiscal front, there is a better than decent chance those tickets you are holding are for an airline that no longer exists!
Airlines in 2009 are going to be a mess unless the economy miraculously turns around suddenly. Expect many failures among the smaller airlines with a number of the bigger airlines staggering into bankruptcy for protection from creditors. With this in mind, try to buy tickets as late as possible to reduce your risk.
Author: Richard Chapo
Article Source: EzineArticles.com
Provided by: Smart cooker
