Wednesday, August 13, 2008

State of the Industry -- Airlines

For the past weeks I'm watching international news in cable channels like CNN, BBC and Channel News Asia, I can't help to notice that airline news is one of the hottest issues being reported whether in Asia, Europe or North America. A layoff here, additional fees for each checked bag there and tens of issues more which directly or indirectly affect the 2.3 billion riding public annually in a negative way. The numerous news today are a far cry on what is the industry like two years ago when almost all industry leaders are predicting a double digit growth in the fleet size and income of airlines as the demand for air travel will soar in the sky specially for emerging markets like China, India and the Middle East.

Never I heard a news report two years ago that airlines will cut their flight frequencies in a number of its destinations or they will cancel their orders of new aircraft to better service their loyal customers.

The evil power of speculation took its toll in the price of petroleum products specially for the jet fuel hungry jumbo airplanes. All modes of transportation that require petroleum were affected with special emphasis on airlines as their airplanes gobbled up gallons of jet fuel by the minute. Some airlines were forced to cut costs by laying-off hundreds of its employees like what the biggest carriers in the U.S. did. Another way to cut costs for the airlines is by opting to a more budget friendly alternatives in their direct and overhead expenses like outsourcing non-operational work like cleaning planes and passenger reservation services. For example, don't be surprised if you hold an American Airlines or Delta Airlines ticket and decides to call the airline's hotline number to request for a vegetarian meal and from the other side of the line an Asian-sounding accent agent answered your call. I have a friend who worked for a call center here in Manila which handled calls on behalf of American Airlines reservations department in the U.S.

If I may conclude, I think that the golden age of flying has ended many years ago. Many say that you don't get anymore a privilege feel when you fly these days unlike 10 to 20 years ago when all of the passengers get a pampering in the air and even before entering the departure gate. Even some legacy or full-service carriers are adopting the business models being used by low cost carriers as they start to charge for baggage fees, no more free food on short flights (if there is, you will be bombarded with empty calories from junk foods) and I even heard in the news that a U.S. airline will start to charge passengers who want to use pillows and blankets... on the bright side you can take home those as a souvenir. I just hope that the airlines will not have an idea to charge us passengers for using their seat belts.

For those who just want to get from point A to point B and are not particular about the special complimentary services legacy airlines offer, they have the budget airlines or low-cost carriers to thank for. An airline makes money when its airplanes are on the air so budget airlines reduced its aircraft turnaround time to increase its aircraft utilization. I am not a fan of budget airlines but as much as possible I try to fly with them to save a few hundreds of pesos. Some budget airlines even operate newer airplanes as compared to full-service airlines so safety and aircraft maintenance issues are not my concern.

Now that the price of petroleum products continue to stabilize in the world market, I hope that airlines will now avoid plunging into red this time because I love flying and I don't want them to loose their business as it is always good for the consumer for an industry to have many competitors.


Lawstude said...

i agree carlo. who would ever dream of traveling countless hours by sea. i certainly don't.

Stanley said...

Totally! You know if we don't have airlines, we wont have airline food. Call me wierd, I love airline food....=)

kegler747 said...

@ lawstude: I don't like sea travel :)

kegler747 said...

@ stanley: Sometime I like airline food sometimes I don't