Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Fortune Magazine: "High Oil = Low Prices?"  
User currently offlineAirwave From United States of America, joined Mar 2006, 1117 posts, RR: 3
Posted (8 years 4 months 2 weeks 5 days 15 hours ago) and read 2364 times:

I just received the May 15th issue of Fortune today and in the "On the Radar" section (pg. 32), is the following brief. (Fair use excerpt follows.)

Quote:
(...)Though oil prices and airfares are still on the rise, don't expect it to last. (...) "Expect fares to fall, " says veteran industry pundit Joe Brancatelli. "It is what has happened every timeoil prices have spiked." One reason: Airlines always overestimate what business travelers will pay. So as walk-up fares increase, business travel decreases. To make up the shortfall, airlines start pricewars. It might all add up to reasonable summer fares.

Coming on the heels of what has been said on similar threads in recent weeks, I thought this was an interesting analysis. But what do I know?  Silly

Airwave  eyebrow 

My apologies if this has already been discussed, but my seach didn't discern anything. If this is a duplicate thread, please delete. Thank you.


When you do things right, people won't be sure you've done anything at all.
6 replies: All unread, jump to last
 
User currently offlineDtwclipper From , joined Dec 1969, posts, RR:
Reply 1, posted (8 years 4 months 2 weeks 5 days 15 hours ago) and read 2352 times:

Quoting Airwave (Thread starter):
(...)Though oil prices and airfares are still on the rise, don't expect it to last. (...) "Expect fares to fall, " says veteran industry pundit Joe Brancatelli. "It is what has happened every timeoil prices have spiked." One reason: Airlines always overestimate what business travelers will pay. So as walk-up fares increase, business travel decreases. To make up the shortfall, airlines start pricewars. It might all add up to reasonable summer fares

I would agree if this were 1980, 1990 or even 2000, but not now. NO Airline can afford a price war today.


User currently offlineSirOmega From United States of America, joined Sep 2005, 735 posts, RR: 0
Reply 2, posted (8 years 4 months 2 weeks 5 days 14 hours ago) and read 2322 times:

The only reason we'll see prices drop the slightest is if there is a economic pullback/correction or recession. And even then I'd expect airlines to park metal and reduce capacity rather than start a fare war.

User currently offlineKhobar From United States of America, joined Mar 2006, 2379 posts, RR: 3
Reply 3, posted (8 years 4 months 2 weeks 5 days 14 hours ago) and read 2287 times:

Oil prices are artificially inflated due to so-called "jitters" about instability in the Middle East (at the moment the driving force is the farce over Iran's nukes. If no fuss had been made then oil would be down).

User currently offlineAirwave From United States of America, joined Mar 2006, 1117 posts, RR: 3
Reply 4, posted (8 years 4 months 2 weeks 5 days 14 hours ago) and read 2268 times:

Quoting Dtwclipper (Reply 1):
NO Airline can afford a price war today.

And yet, isn't that exactly what will happen? It seems inevitable because it has *always* happened. All it takes is one airline adjusting prices noticeably for the majority to follow.

Airwave  eyebrow 



When you do things right, people won't be sure you've done anything at all.
User currently offlineMaxQ2351 From , joined Dec 1969, posts, RR:
Reply 5, posted (8 years 4 months 2 weeks 5 days 12 hours ago) and read 2208 times:

Quoting Khobar (Reply 3):
Oil prices are artificially inflated due to so-called "jitters" about instability in the Middle East

Wow, someone FINALLY understands why prices are so high!! The oil companies aren't gouging (well, maybe not as bad as people say they are). It's the damn NYMEX traders that inflate the prices like none other for something as simple as a rumor that Iran might advance their nuclear program or Nigeria may have more rebel attacks, etc etc. Exxon Mobil doesn't hike their prices on a whim like NYMEX traders do!!

Quoting Dtwclipper (Reply 1):
NO Airline can afford a price war today.

Well, yes and no. I don't know the exact figure on it, but WN's oil futures are set to run out in about 18 months or so, IIRC. Why has AA been building up it's ops out of DAL so significantly?? Why have they been offering free round trip tickets out of DAL just for joining AAdvantage?? AA is gearing up for the coup de gras on WN, out of DAL at least, once WN's oil futures run out. Why do you think AA got the nickname the "Sky Nazis"?!? As the only legacy carrier who has not declared bankruptcy, and is even expected to turn a decent profit for FY2006, they could probably easily eradicate WN out of DAL if they put a lot of resources into it. They may lose a lot of money doing it, but when was the last time AA cared about that, so long as another competitor was eliminated?!?! Air Cal, Reno Air, TWA, the list goes on.....

Personally, I say more power to em!! Once WN oil futures expire, AA prices out of DAL will be dirt cheap.......and, I've never been a big fan of WN anyway, so I'd probably secretly revel in it if AA was able to get rid of em'.

-Max


User currently onlineStitch From United States of America, joined Jul 2005, 31001 posts, RR: 86
Reply 6, posted (8 years 4 months 2 weeks 5 days 12 hours ago) and read 2193 times:
Support Airliners.net - become a First Class Member!

As WN's hedges start to expire, they are having to either raise their base fare or start adding "fuel surcharges". So that is raising overall fares. JB is correct in that the absolute last-minute "walk-up" remain extortionist, but the 3-day and 7-day unrestricted fares are close to what the 21-day and 30-day restricted up the yazoo ones are on some routes and dates, I have noticed.

Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Brazil Authority Fines Airlines - "fares Too Low" posted Wed Aug 2 2006 19:53:45 by Antiuser
One More Newspaper Joke (BIQ New Low "Coast" Legs) posted Fri Jan 20 2006 14:36:32 by Rpaillard
Will High Oil Prices Ever Force A Ch. 7 Filing? posted Mon Jun 20 2005 16:07:07 by Quickmover
YX All Time "low" In A/C Damage posted Mon Jun 6 2005 22:15:58 by SkyexRamper
Which Are "oil Destinations" posted Sun May 8 2005 09:34:33 by Mozart
Boeings Sales! Can High Oil Prices Help? posted Thu Feb 24 2005 20:29:20 by Co7772wuh
Why Piece Concepts In Times Of High Oil Prices? posted Wed Sep 29 2004 18:24:00 by Bustaphil
Southwest "Flying Low" Into PHL posted Fri Jun 11 2004 04:09:32 by Cha747
High Oil Prices Threaten Asian Airlines posted Sun May 16 2004 10:50:08 by 777ER
How "Low" Is Morale At UA... I Mean Really? posted Wed Aug 14 2002 20:24:19 by Trickijedi