Is the airline industry headed towards a tailspin?

As crude trades at $130+USD on the exchange, everyone is getting hit hard.
Except the oil corporations. And as it starts effecting larger industries such as travel, it could send airlines into a circular problem that they won’t be able to dig themselves out.
With the news of the high crude trade, American Airlines has said that they’ll cut thousands of jobs and retire up to 85 jets in an effort to combat fuel costs. The British Airways CEO, Willie Walsh, announced on CNBC yesterday that last year they spent $4 billion in fuel and this year is projected to be at $6 billion. Even while the industry is trying everything in its power to cut costs, including add a few minutes onto the flight by slowing down.
Unfortunately, not everyone is as lucky as British Airways posting a $1.7 billion profit, and as shown, Northwest and Delta are merging while there are rumors of United looking for a partner. But with job loss, and everyone buckling down, you wonder about who’s actually following the old adage of having to ‘spend money to make money’.
Let’s be frank. Regular consumers will not be taking as many flights unless there are perks to sway them and costs are kept low enough to be worthwhile. While the shipping industry has shifted on the world market from boat to plane, there could be a reversal if costs keep up.
My thoughts? While hunkering down for the storm where no end is in sight yet, airline executives need to make very strategic plays to keep the passengers flowing. Being that a lot of travel is discretionary and not so much necessity, they’ll be hit the hardest, especially as we begin the summer season of vacation and travel. Investments like what British Airways is doing is probably key for the short term, but these high oil prices are going to be a constant pain in their side until someone develops a new type of airplane fuel.
Photo Credit: (bfraz)