Airlines in the News

What a crazy few weeks these have been for the airlines! The Southwest Airlines inspection fiasco from a few weeks ago has led to Congressional hearings on airline safety that kick off today. Since the Southwest incident, Delta, American, and now United have canceled flights as they have been caught in their own inspection quagmires. Aloha Airlines declared bankruptcy and stopped flying as of this past Tuesday. ATA announced today it has ceased all flights as it files for bankruptcy. We have seen the airlines keep fees artificially low for years, choosing other ways (like outsourcing maintenance) to save money. If one airline raised fares, the others would normally stay low, resulting in a loss of customers for that airline. After all, the general public has changed from brand-loyal to cost-conscious customers. I compared it last year to the airlines all bleeding money, with airlines posting losses in the millions for quarter after quarter. But no one wanted to stitch their own wounds. Seems they wanted to wait until some of their competitors died of blood loss. Then they could mend their own wounds and take business from their dead competitors. Well, the funeral procession may have just begun. Can you hear the dirges in the background? And lets not forget the FAA. It is part of the Congressional hearings that are taking place today, with current and former FAA inspectors testifying that the FAA has become too cozy with the airlines they are supposed to regulate.  John Nance even came on Good Morning America this morning saying that the FAA has become ineffective and most inspectors are focused on retiring and not on doing their jobs. He suggested that to fix the problem, we need to do away with the FAA, get rid of every FAA employee, and start all over again with a new regulatory agency. Kind of an extreme solution...isn't it? Thanks for reading, Joe Escobar