Originally Posted by
MikeMpls
Many of us already have -- join the club.
My wife & I were in the air 30 weekends a year plus a vacation or two. Between the two of us, that's about 200 flights not being flown in 2010.
The airlines collectively will end up reducing their schedules by ~2 flights annually to compensate just for us. The more people who quit flying, the more they will have to cut back.
The current economic situation only compounds this:
- Due to higher fuel prices, airlines need more passengers paying higher fares.
- Due to higher fuel prices, fewer passengers can afford to buy airline tickets.
The bottom line is that right now the airlines need every paying passenger they can get. At some point they will realize that a large portion of their customer base has been alienated for reasons other than energy costs.
They airlines are headed for the abyss. I dumped all of my travel stocks in December and that was one of the best moves I've ever made. For the past ten years I always had at least one airline and two other travel related stocks selected on the basis of my experiences while traveling.
It's funny that some folks think that predictions of eminent airline decline are guesses rather than financial analysis. This is a certainty that has yet to play out.
I checked the market Friday and airline stocks are down over 37% against the Dow since 12/1/10. Coincidentally the week after scope and grope really got underway.
12/1/2010 4/29/2010 Change vs Dow
DJIA 11,052 12,728 +15.16%
DAL 13.88 10.33 -25.58% -40.74% Delta
UAL 28.37 22.82 -19.56% -34.73% United
AMR 8.56 5.87 -31.43% -46.59% American
LUV 13.42 11.75 -12.44% -27.61% Southwest
Based on the current barrel price of $128 gas will be $4.50 in most areas by mid-May. The current $4.00 prices are due to the $118/bbl costs a few weeks ago. Therefore the airlines will see a sharp spike in fuels costs mid-summer as their lock-ins expire and fares will increase or they will have to offset the losses through other cut backs.
Once the business traveler again becomes the visible and primary source of revenue for the airlines, they will be pulled into the TSA issue, assuming FFers complain en masse.
For now, the oblivious kettles keep the airlines flights full and allow them to sit on the sidelines except where the pilots and flight crew are affected.
My guess is that the airlines will be in serious trouble toward the end of the third quarter and they will be grasping at every opportunity or issue that will improve ridership. We need to make this a hot button topic with the airlines when that time comes and let them know that TSA is why we aren't flying.