According to various polls, 2008 is going to be an interesting (some say gloomy) year for all of us due to the state of the economy.
A CBS poll claims nearly three-quarters of the American people think we are headed into a recession, in fact, some believe we are already there. Unemployment will be pushed higher, energy costs will continue to surge, falling housing prices and tightening credit will punish consumers. One prediction by blogger Jason Hamilton, a stock market analyst from the Gold Stock Bull Web site states, “Oil will dip towards $80 per barrel due to the slowing economy and release of additional supplies. However, continued inflation and war in the Middle East will push oil back above $100 and could see the price spike towards $150 in the event of war with Iran.” Grim news for the current state of the nation.
But how will it affect our industry? The major factors troubling aviation according to many of our readers are fuel, labor, capacity and air traffic control, low-cost vs. legacy, open skies and international expansion and going “green” as well as other taxes.
Airlines will most likely continue to see enormous pressures on costs and will have to balance prices with capacity. As the low cost carriers continue to grow, they will struggle with the same issues that the legacy carriers have, in fact, they have already started to become one and the same. Most believe there will be some sort of consolidation this year. And if the US majors continue to consolidate, the LCCs may see some unique pairings and consolidation, according to industry consultant Doug Abbey.
And there simply can’t be a stone left that hasn’t been turned when it comes to controlling costs ... or is there? If you ask the Boyd Group, the one stone left is “dynamic minute management.” “Each minute represents money ... anybody who’s watched airport operations to any extent can see enormous numbers of minutes squandered to the gods of waste.”
Captain Michael Baiada of the ATH Group says, “Airlines need to recognize that the time between gate departure and gate arrival is their ‘production’ line, yet they essentially turn it over to the FAA — one of the most mis-managed entities in Washington — to direct and run it. As the ATH Group’s programs have shown, airlines do have some ability to manage their own production lines over and above the ATC system. The result can be thousands of saved minutes each week. And lots of dollars not lost.”
Airlines and ground handling companies have been trying to perfect turn-times since the birth of aviation, but the Boyd Group seems to think there is a long way to go. “Most carriers will say that they have ‘task teams’ or ‘continuous improvement programs’ that already monitor these types of things, so all is well. Sure.” What do you think? Send an e-mail to me at email@example.com and let me know your thoughts.
As always, thanks for reading!
With more than half of the nation's major airlines in bankruptcy, industry leaders and analysts have no clear consensus on what commercial aviation will look like in the future.