Hi all

I was just wondering - what is the likely effect of the war between the US & Iraq going to have on Award Availability & on the number of cheap international flights available?

I don't recall what happened during Gulf War 1.

Anyone remember? Thoughts please? Will we see lots of cancellations and lots of award seats made available?

cheers Peter

Airlines will react with capacity reduction to prevent high price decrease. Airlines also expect an increase of oil prices and have to fly longer routes (in order to avoid some areas during that time).
In the long run, higher prices are much more likely.

I remember reading that in this period the airlines collectively lost every penny of profit they had made since World War 2.

It will be hard to redeem awards DCA-SDA during that period.

If commercial planes are used to fly troops around the world, then they could possibly be taken from the current stock of planes in service. Most likely if this happens, though, the planes in use would be taken from the ones grounded in the desert to avoid scheduling changes.

Last Gulf War USA Domestic traffic dropped 5% and International traffic by about 40% (compare to the aftermath of 9/11).

Fuel costs doubled in months during the last Gulf War. They are likely to rise again although, with Russia producing more, there is likely to be another steep rise - compounded by the Venezuela problems.

Long haul business travel is one of the first areas to go...this is the profitable stuff...this hurts the airlines.

CAPEX is down - Aeroplanes are being stored in the desert an OPEX is down too - how many people have been laid off..? Capacity was slashed after the 09/11 and is now only being re-built on clearly profitable routes.

The result.....more airline bankruptcies in a prolonged Gulf War 2, more cost cutting as airlines react to the war and begin to remove services (when the services are reduced sufficiently, then the costs will stabilise and go up slightly).

Unless a really ballsy airline (with the attitude of South West, Ryanair or Easy Jet) comes along and pushes the market hard, I suspect that fares will harden in general and there will be less discounting and less mileage travel available.

Profit? They used to make money? I must be too young to remember...

They were all making money until de-regulation (ok, maybe TWA was an exception at times).

I'm sure the airlines themselves wished they knew the answers to this. In the first Gulf War, many airlines were used to transport troops (particularly Northwest) and did curtail schedules. I do not recall many significant discounts, but there were many mileage promotions to attract fr. flyers to remaining schedule.

The first Gulf War was short, and yet put a severe strain on airline finances. Should a second war be more prolonged, the government will have to intervene with massive subsidy.. either by transport contracts or directly- to maintain a viable air transportation system.

I do also recall hotel rates dropping quite a lot !

If you take all the USA airlines as a group from the Wright Brothers to the present day, the entire industry collectively in their entire history has never made a dime. It is truly a terrible business.

Am I detecting a hint of hope for war so we have cheap airfares and more award ticket availability?

I hope not. No one wins from war.

Actually, oil prices rose in the months leading up to the war, more than doubling between the end of July and December 1990. They tailed off a bit in December and January. The morning after the war began, though, crude dropped $10/bbl, from about $30 to $20, and stayed at those lower levels during the war and afterwards. I'm not in front of my Bloomberg terminal so I can't give exact prices, but that was the general idea. The drop on the morning after the war started is one of the more famous stories in trading-floor lore.

The lesson was that by the time the war started, all the uncertainties over oil supplies were already priced in. When war finally happened, and people started believing the U.S. was in control, crude tumbled. So far the patern is repeating. Nobody knows what'll happen next, certainly not me, but every other time oil has gotten this high it has evenually come back to earth.

[This message has been edited by LastClass (edited 01-27-2003).]

Ambulance Chasers, Lawyers and theives?

Agreed

I'd prefer a peaceful settlement myself but given that a war appears likely one needs to factor this into one's travel plans.

cheers Peter