[Author’s Name]
[Institution’s Name]
Essay on Why the price of Oil affected the airline economy?
The once-friendly skies of the nation's major airlines have gotten a little reserved, even irascible of late. And six months from now, the atmosphere at 30,000 feet could deteriorate even further. Air travel has been undergoing a steady metamorphosis since 9/11, with carriers shrinking legroom, pulling free meals, and even eliminating complimentary pillows. And thanks to high oil prices and intense competition from upstarts like Jet Blue and Southwest, the process is only accelerating.
That's put the so-called legacy carriers in a position that some analysts say just isn't sustainable. A few, like US Airways or United, may go under in the next few months. Others could suffer a slow, steady decline, while the most successful of the former giants in the sky may simply morph into bigger versions of their low-cost nemeses.” its good news for the airlines that they've been able to accomplish what they have in terms of cost-cutting," says Kevin Mitchell, president of the Business Travel Coalition, which represents corporate travel executives. "But the long-term trend is still declining yields, so it's not a pretty picture.” Since deregulation in 1978, the nation's major airlines have thrived in a boom-and-bust cycle, economizing during recessions only to rake in money once economic indicators started looking up again. But in this last economic upturn, the majors continued to lose money. Because of high fuel prices, they're on track to lose an estimated $5.5 billion this year.
That means, as Dave Swierenga of AeroEcon Consulting puts it, "They have not filled up their barns, and they haven't prepared themselves to weather the next downturn."As the economy slows, it's going to become even more difficult for them to borrow money. Without good credit, the legacy carriers will find it difficult to buy the new planes needed to meet growing passenger demand.........
