Monday, November 08, 2004

Airlines choking to death

Forbes.com story highlights ten reasons why the airline industry in its present form will not survive. I am not inclined to be long airlines stocks that are moving higher due to lower crude prices, unless the economic model is changed lower crude pricing alone can not save the airlines. It basically boils down to economics of having too much capacity in the industry. Blaming high oil prices or terrorism is not the solution, the current model does not work and bankruptcy driven reorganization is the best option. The reorg of airline industry is certainly bad for airline manufacturers and their suppliers, travel agents, internet travel sites, airlines labor force. The beneficiaries will be smaller more economical airlines, web conferencing providers, and fractional jet ownership.

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