July 14, 2009

Airlines prepare for further stormy skies

Already in the throes of a dismal vacation season, airlines are preparing for even worse travel seasons come fall and winter, industry analysts say.

Business and international travel have swooned, spiking fuel prices are hard to manage and credit markets are more reluctant to lend -- all converged to make for a lousy summer for the airlines, The New York Times reported Tuesday.

In the near term, airlines can weather the downturn by cutting routes, grounding planes, furloughing employees and imposing fees, analysts said. When the latest round of capacity cuts become effective in September, seats on domestic flights will drop to 66.5 million -- down from about 84 million in 2001 and the lowest September figure since 1984, reports OAG Aviation, which tracks flight schedules.

If conditions continue to worsen, analysts say, some airlines may not survive.

There are too many airlines and too much capacity and really no pricing power, Hunter Keay, an airline analyst at Stifel Nicolaus in Baltimore, told the Times. This is as bad a crisis as the industry's ever seen.