Next Up, Another Pan Am?
Are we about to witness another Pan Am-style implosion in the airline industry? Dean Foust and Justin Bachman suggest that such an upheaval may be on the horizon as the legacy carriers groan under the strain of triple-digit oil prices:
While many carriers have in the past exploited bankruptcy as a competitive maneuver to cut costs, experts believe that any carrier that falls into Chapter 11 going forward will likely have to liquidate. That would probably include one or more of the major airlines. “I think the real risk this time is not Chapter 11, but (Chapter) 7 — liquidation,” says a senior executive of one major airline. “What happened to Pan Am? TWA? Eastern? I think there’s a real risk here that some airlines just go away.”
Accurately predicting just what will happen in the airline industry over the next year or two is as much of a guessing game as determining whether an upcoming trip will go smoothly. But certain changes in the industry seem more likely than others. One that’s already in motion is consolidation. Another prospect is foreign ownership of carriers operating within the United States. And of course, over the long term, fewer companies and downsized fleets (American recently announced it will cut aircraft and today JetBlue announced that it will significantly slow its own growth after its shares hit an all time low today), mean higher fares and decreased choice for travelers.
The news paints a bleak outlook, and it’s one I certainly can’t ignore. If there’s any upside for travelers that I can see right now, it’s that we’re going to be forced to become savvier when we travel and smarter about finding deals before we go.