For an industry with razor-thin margins, rising fuel costs can and do further pressurize current airline-labor negotiations.
Labor took large wage and benefit cuts during the state-of-emergency days following 9/11; many labor groups undoubtedly feel they deserve richer contracts this time around to make up for those difficult, but necessary, "pull together for the team" losses.
But air travelers are feeling their own pump pinch.
While airline employees can expect to see a more forceful pushback from management as the cost of fuel soars, customers will have to make peace with more expensive ticket prices and fewer air service options.
Ellen Creager says it best over at the Detroit Free Press:
More pain.
Northwest Airlines hiked its fares as much as $50 on Sunday, matching last week's hikes at five other U.S. carriers, Bloomberg News reports.
The cause, of course, is high jet fuel prices.
United Airlines hiked its fares Friday, followed by American, Delta, US Airways and Continental. Now, Northwest joins the crowd.
Sadly, the hike is just more pressure on Americans to vacation near home this summer. With high-season airfares between the U.S. and Europe running about $1,200 to $1,500 round trip this year, the dollar in free-fall against world currencies and gasoline headed for $4 a gallon, the backyard is looking better all the time.
And I'm the travel writer.
Bleak news. Witty messenger.
Priceless...
[UPDATE Mar 21, 2008]: More bad news on the upcoming travel season from Adrian Schofield at Aviation Week:
The latest FAA Aerospace Forecast proves once again how quickly fortunes can change in the U.S. airline industry. A year ago, the FAA's prognosticators foresaw healthy growth in airline demand in Fiscal 2008. Now they believe domestic traffic growth will sputter almost to a standstill as weakening market conditions hit home.
"We're seeing a definite pause in growth," FAA Acting Administrator Robert Sturgell says. "We didn't see [the pause] in last year's forecast, . . . but this year it's pretty clear - we're talking flat growth in operations and slow growth in passengers." Sturgell does stress, however, that while the near term looks bleaker, the longer-term outlook remains "vibrant."
The headline numbers from the FAA's annual forecast - which extends to 2025 - support Sturgell's comments. Overall traffic on U.S. carriers is expected to rise by 2.9% in Fiscal 2008, down markedly from earlier projections of a 4.2% increase. Domestic traffic will be hurt particularly badly: Last year's forecast predicted growth of 3.4% for 2008, but the new forecast sees growth slowing to just 0.6%.
Sturgell points to a "series of cascading events" as the cause of the forecast downgrade. Chief among these are oil prices continuing their climb past $100 a barrel, coupled with the U.S. economy's apparent slide into recession.
The FAA is hardly alone in revising its projections. The International Air Transport Assn. in December slashed its global airline profit forecast due to the expected economic slowdown, and another downward revision is anticipated in the next few months. U.S. airlines - even traditional growth engines like Southwest Airlines - have also begun scaling back their capacity plans for this year.
Ah, the days of breezy $200 fares to Europe. AA ad from '87:
0 comments:
Post a Comment