RiverVisualNYC From United States of America, joined Nov 2003, 930 posts, RR: 3 Reply 3, posted (10 years 1 week 2 days 20 hours ago) and read 1511 times:
I am willing to go out on a limb and say I don't imagine airline travel will return to pre 9/11 levels for years in the US, because alot of discretionary business travel has been heavily curtailed and alot of leisure travelers are still a bit concerned about safety issues, or tapped out financially. While a certain degree of business travel will come back with the uptick in economic activity, alot of it has been replaced by videoconferencing and other technology. Also, while the amount of business travel may rebound, there may be less travelers in the aggregate as in the drive for productivity, there has been alot of headcount reduction. For example, while a company may have formerly had, say, 10 reps out making 2 business trips a month, they now might have 5 reps making 3 trips a month. Less tickets sold overall. As for the leisure traveler, I think fares have been low enough to stimulate demand, so anyone who's not afraid to or who isn't broke is already out there flying. Net net, the industry is going to have to focus on profitability through cost cutting to survive, or create new business models that add value and justify a premium price, because there won't be a big surge in traffic volumes.
LatinAviation From Ireland, joined Nov 2003, 1276 posts, RR: 16 Reply 4, posted (10 years 1 week 2 days 20 hours ago) and read 1507 times:
I think it was UBS Warburg who came out with a report saying that US industry capacity in summer 2004 will match capacity of summer 2000, but US majors capacity will be down 15%, meaning low cost carriers make up the difference.
It's interesting to note, that 11 out of the 18 fare increases (by majors) have been rolled back within 24 hours, most were in the $5 range. So that's going to put a huge burden on the revenue side - airlines will still have to make up for the variance from the cost side, which will be tough for the majors because they've cut a lot of fat out of their cost structure.
The capacity problem is a double-edged sword for the majors; on the one hand traffic will rebound but at what cost? Capacity increases are a short-term solution to a long-term fundamental problem. If the airlines don't address some of the other fundamentals, capacity will only solve their problem for a few years. Alternatively, the capacity issue will probably squeeze the middle low-cost carriers, like Frontier and Spirit. Look at what AA has done in FLL already (Spirit), not to mention JetBlue, Song and Southwest's large presence there.
RiverVisualNYC From United States of America, joined Nov 2003, 930 posts, RR: 3 Reply 5, posted (10 years 1 week 2 days 19 hours ago) and read 1480 times:
Latin: Good points, FYI I think the UBS Warburg airline industry analyst that is behind the report is Sam Buttrick, a smart guy who has been around a long time and has a good sense of industry history. I would put more weight on his opinions than on those of some of the Wall St analysts who are just stock market types with no sector knowledge. I had an interview with the guy some 10 years ago in which he quizzed me about the names of the historical carriers that made up Northwest, even showed me pictures of the liveries, but I didn't do so well and didn't get the job!
Maiznblu_757 From United States of America, joined Mar 2002, 5112 posts, RR: 51 Reply 6, posted (10 years 1 week 2 days 15 hours ago) and read 1396 times:
I see some industry analysts are saying that 2004 looks like it will be a good year. Others are saying its going to be another rough year, although not as bad as this year or in previous years post 911. In my opinion, any sort of improvement, however small, is good. On the other hand, if it is only going to be minute increase in profit, how many years will the larger airlines be able to hang on before they fall victim and die out.
When will the big US airlines begin to see any substantial profit?