Monday, August 17, 2009
Civil aviation can't get a break it seems. According to a story out today discusses the possibility that major U.S. carriers will have to continue cutting size and capacity even after the present economic downturn abates. See Susan Carey, Airline Industry Sees Pain Extending Beyond the Recession, Wall St. J., Aug. 17, 2009 (available here). From the story:
Growing smaller means parking planes, laying off workers and dropping destinations, meaning potential customers have fewer reasons to book. Earlier this month, Delta Air Lines Inc. cited a gloomy revenue outlook for the rest of the year in its plans to cut more management jobs. If passengers don't return to the skies and fares don't rise, some airlines could run low on cash, raising the specter of additional bankruptcies.
Airlines are suffering huge revenue declines as customers put off purchases, trade down to cheaper fares and bank more personal income. Airlines fear that this behavior will stick, exacerbating the "new normal" the industry has been grappling with for the past eight years.