Airliners versus high fuel price by Claudia Sonea

There is certainly a bad omen for the airline industry. The FAA is making a tougher regulation imposing inspections on all airplanes, while the fuel prices keeps on reaching record heights. All this resulted with delayed flights and higher prices, with many bankruptcies (Frontier Airlines Holdings Inc. or ATA, etc) and sorrows. People wonder how much higher the crude oil price could get; now being at a level of $120 a barrel. Food and other goods will be more expensive, not to mention the means of transportation. Airlines had attempts of increasing their ticket price, but the fact that competitors didn’t led to the failure of this attempts- the higher fares meaning lower demand for air travel. In the beginning of April fares rose 13 percent on 280 routes, while in smaller cities were even higher. As it is, the figures portray a dark situation for airlines with cutbacks and bankruptcies of smaller carriers, weather problems and labor strife. Due to higher fares failure, airliners need to deal with everything and find quick solutions like that of merging. For example, Northwest, the nation's second-largest airline, is trying to avoid going out of business by merging with Delta (there are still unsolved issues with the pilots’ union). Also, United is in talks with Continental Airlines and like most of the other rivals, its first quarter had big losses. Only Southwest Inc was luckily enough to be able to boost with profit after the release of the first quarter report. Under the present circumstances of an unstable fuel price that keeps getting higher, it is very hard to forecast anything. Analyst are just looking in awe at the reports released and see that the results are well below their expectations. What’s next?

related story: http://news.yahoo.com/s/ap_travel/20080422/ap_tr_ge/airlines_cruel_summer;_ylt=Akq.AZ4CnMs7wq2XE7iaToSs0NUE

by Claudia Sonea for PocketNews (http://pocketnews.tv)

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edited by Beata Biskova