To recap a bit: My last blog mentioned that many sources, including Aviation Week & Space Technology (AW&ST) report that airlines are using fuel savings to increase profit, rather than competing for pax by increasing capacity and lowering prices. OTOH, it was said that this is great, unless competition pushes airlines into competing for pax by lowering prices and increasing capacity.
In that blog I wondered if this competition has already started. Now, it seems even more likely that such competition has, once more, reared high its ugly head.
The Atlanta Journal used to claim that it “covers Dixie like the dew.” Airline Weekly (AW), which comes to me online, covers airlines—worldwide—the same way. This week it cites examples from all over that indicate airlines are beginning to compete by price. AW states that this is not a coincidence, but that “It’s the very early signs of lower fuel prices encouraging more capacity, which in turn lowers airfare.”
Year-to-date capacity, AW points out, has grown some this year compared to last, even though fuel prices have lowered only recently. As they stay low or continue to drop, temptations to increase capacity will be strong.
Who first said that airlines can’t stand prosperity? Are they about to confirm that again?
