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Why are airline companies going under right now?

My mom went to SF last saturday - the tickets (which were purchased on Thursday night and from Atlanta, GA) cost only $220 (when a 3-day advanced purchase ticket would typically cost $500+) and the planes where about 30% full.

So yes, they're going under, and yes, they are giving tickets at discounts
 
It costs big money to keep those companies going (in the hundreds of million in fixed costs - salary, maintenance, security, utilities, etc...) every single day but without actually any revenues generated. The only way they're headed right now, is down, so long as this tragedy has changed the minds of many that they will no longer fly, fly less, or not fly until better long term security measures are set in place.

You really can't blame them, its scary to be flying at these times.

Plucky
 
You'd think they'd have a little bit of money stowed away for a rainy day. I mean it's a BIG industry that receives a lot of money. Of course I don't think even they could predict that they'd have to shut down completely for a few days.


As for fear of flying, I would hop on a plane without hesitation, so long as it's not flying near Afghanistan. 😀
 
I read this article that said airline's profit margins are razor thin. So thin that they need about 65% of a plane's capacity filled in order to break even. So the difference between loss and gain is a couple of seats. This is from today's Wall Street Journal if anyone is interested.

EDIT: grammatical error
 
Most major airlines were not in what you might call 'great' financial position for several months before the attack, recent union contracts giving huge raises and bonuses to mechanics and pilots (who already enjoyed a respectable wage/benefit package) didn't exactly help matters, and the competitive pricing that's been going-on for a while has hurt them, too. There were a few labor strikes within the past year, if I remember correctly. When you grind all commercial flights to a halt several days, that is an incredible loss of revenue, and airlines have a large amount of what they call "fixed expenses", which are expenses the company must pay whether or not they have any planes in the air. It just put them over the brink and a couple probably won't ultimately recover without filing for bankruptcy protection.
 
I've read that the industry as a whole actually prospered better when they were more regulated by the government... anyone care to elaborate/refute?

And further, do you think that it might happen again to save the industry?
 
I don't see us going back to gov. regulation. Maybe gov. aid in the form of tax breaks to the airlines that they think will survive. With the slowdown in the economy, ppl aren't so excited about going on a leisure trip. What really makes the $ are the plane tickets that are bought 2 or 3 days in advance, where they totally price gogue people (usually businessmen), without a Sat. stayover. Business is slowing down, so ppl aren't flying as much. Very bad news for the airlines.
 
<<I read this article that said airline's profit margins are razor thin. So thin that they need about 65% of a plane's capacity filled in order to break even. So if the difference between loss and gain is a couple of seats. This is from today's Wall Street Journal if anyone is interested.>>

Thanks for the info, looks like I had no idea how things really worked in the airline industry. 😉


<<I've read that the industry as a whole actually prospered better when they were more regulated by the government... anyone care to elaborate/refute?

And further, do you think that it might happen again to save the industry?>>

I doubt we'll see the government take over the whole enchilada, but it seems quite likely they will be paying out billions in subsidies for a while. Unfortunate, but we can't just let these airlines go out of business. That would be disastrous.

I don't think tax breaks will be enough. Apparently they need to pay the bills (not just taxes) and they need to pay them now.



 
I've read that the industry as a whole actually prospered better when they were more regulated by the government... anyone care to elaborate/refute?

Singapore Airlines is largely government controlled and I think it is the most profitable Airline in the world (not 100% sure)
 
This defenatly started longer than since the attackes.
I read that only like two airlines in the US were making money last quarter, and they were barely over breaking even
 
Soon we will all be paying for the airlines through increased taxes. Say goodbye to those refund checks... eventually the govn. bailout will cost you and I.
 
im thinking government will step back in, regulate air-fare rates, there will be only 2-3 airlines left, and we'll be paying 70's crazy airfares again. Worked back then, probably work now.

say goodbye to $200 flights, and hello to $500 flights. Regardless of the price, we're still going to fly..

chances are still greater to die by car/train/boat/whatever than flying. I'm sure as hell not driving to rochester for thanksgiving, i'll take my chances flying, and pray to god my time doesn't come..

 
It's going to suck. Just when flights were so nicely priced that one could just hop onto a plan anytime for lil money. Boy, my family flew to Canada last month just to see Lion King one night cause there were no tickets available in NY... The days of me or family members flying 800 miles for lunch I guess are gone. It is really going to hurt travel. Costs for security are going to be insane. Our quality of life has been severely hurt. The lower class families are going to be most hurt. They are going to have a tough time paying for a family of four to go to Disney world. Will cost em $2,000 instead of $500-600. All this crap really pisses me off. These bastards have really messed with our leisure and vacations. Our fun times have been greatly reduced by a few bad apples. I feel bad for the airline industry... One jackie on the radio was going off saying the gov. has no obligation to help the airline industry and that they should suffer the consequences as capitalism says. That is just wrong. The consumer will suffer and we will hardly have an airline industry.
 


<< Most major airlines were not in what you might call 'great' financial position for several months before the attack, recent union contracts giving huge raises and bonuses to mechanics and pilots (who already enjoyed a respectable wage/benefit package) didn't exactly help matters, and the competitive pricing that's been going-on for a while has hurt them, too. There were a few labor strikes within the past year, if I remember correctly. When you grind all commercial flights to a halt several days, that is an incredible loss of revenue, and airlines have a large amount of what they call "fixed expenses", which are expenses the company must pay whether or not they have any planes in the air. It just put them over the brink and a couple probably won't ultimately recover without filing for bankruptcy protection. >>



Add to all of this...volatile fuel prices. Filling up a jetliner isnt like running your Civic down to Texaco, we are talking thousands upon thousands of gallon of fuel, even for a short flight. As small as a one penny rise in jet fuel prices, could cost an airline millions of dollars a year.

And never forget the fare wars of the last few years, cost of business going up and money coming in getting smaller, is never a good combination for business.
 
When the Gov shut down the airlines it has some responsibility for the failure of the airline. You and I are paying a lot of tax just so they have a place to land and take off, not counting the costs of building's and roadways leading to the airport. Despite the dire straits of the airlines I have not heard of one of the top managers offer to work for less or give back multi million dollar bonuses to keep the airline going. They should take a lesson from Lee Iacoca.
There is no reason that the airlines should have to pay the fees to the airports that they could not use while they were all grounded by the Goverment. The gov can and should bail them out not with gifts but with no interest loans. Eventually they will work there way through this if they want to.
Bleep
 
I personally feel (always felt this way before) much safer driving than it is to take a flight to wherever, unless its a part of the job as a business traveller (as many prolly are) and have to fly cross continents.

When I drive, I can control where I'm going, and how fast I want to go. On the plane you're pretty much left to whoever's in charge of the plane. I dunno, flying's just never my thing.

Plucky

 


<< It's going to suck. Just when flights were so nicely priced that one could just hop onto a plan anytime for lil money. >>

That was part of the problem. Air travel shouldn't be 'cheap', because 'cheap' in this case is directly related to 'safety'. Planes cost $90 - $150 million dollars each, plus the costs of proper maintenance, security concerns, etc. I would like to see air-fares increase by 25% - 50%. If consumers want modern, secure and safe air travel, let them cough-up the bucks to for it. If they don't want to pay for this, let them take the train, car or boat.

This is where regulation becomes beneficial, so that all air companies must have the same safety, security and maintenance requirements so they don't skimp on that stuff in order to lower fares.
 
I'm sorry to say this, but I think that the government should control the airline(s). this way money wouldn't be a huge issue, and everyone would pay the same price... just my .02
 


<< I'm sorry to say this, but I think that the government should control the airline(s). this way money wouldn't be a huge issue, and everyone would pay the same price... just my .02 >>

Money wouldn't be an issue? Is that what they teach in school nowadays? As soon as the government runs something, money isn't an issue?

If the average US citizen handled their financed like the US government does they'd be rotting in a jail cell for the rest of their lives. Airfare would not get cheaper. It may appear cheaper, but the increased taxes to pay for a bloated airline beauracracy would actually increase prices.
 
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