Saturday, June 21, 2008

Defunct Airlines

Sadly, this is a horrid market for the airline business. Worldwide 35 have failed so far during the first six months of 2008.

Compare that 35 to the YEAR totals
2007: 30
2006: 25
2005: 40
2004: 41
2003: 58
2002: 37
2001: 42
2000: 19

What to note from this history:
We were just coming out of the post 2001 airline failure time frame.

Edit: Classier Image to one more appropriate for this blog.

I'm expecting it to only get worse. Yield is down, passenger count is down, and fuel costs are up, up and up. So far I've seen announcements for US capacity to be cut about 8%. That will translate to 8% fewer jobs, 8% (or more) less advertising (once the current pre-bought air time expires), and about 10% less fuel burn (they are preferentially cutting kerosene hogs).

The trickle down through the economy hasn't even begun. I'll leave the reports on retail to the other blogs that are doing a better job. I'm an aviation nut as well as a bubble blogger. So I'll keep reporting on the economic indications from airlines.

The poster child of the airline downturn is Las Vegas right now. Its falling apart. Only Hawaii is seeing similar levels of service cuts. Why? These are vacation markets. Vacations are optional in a downturn. We're seeing the same impact almost everywhere that relies on vacation traffic (e.g., DC) Somehow, Florida is still doing ok (in terms on number of travelers. I do not have the stats on spending.)

An aviation thread on Las vegas:

Got Popcorn?