by pea-jay » Mon 18 Oct 2004, 23:46:05
I have a feeling the down slope of this curve will be much steeper. Remember energy is only part of the equation. When fuel costs rise, so will prices. Higher prices will crimp demand, that part's understood. But energy costs to the airline itself won't be the only thing that clips the airlines wings. Peak Oil won't singularly impact airlines. At the same time PO will be wreaking havoc on the overall economy in the form of unemployment, inflation and eventually the collapse of the financial system. Each hit from outside sector will be another nail in the coffin. As more people are forced to pay more life's essentials, travel will be seen more as unessential luxury. Demand for travel will decline, but unfortunately for airlines, they will be unable to lower the prices to adjust. Unable to fill seats and unable to lower costs (salary cuts only go so far) the creditors will come banging on their respective doors. One by one each airline will fail, depending on how leveraged they are and profitable they can operate. Only the leanest operation(s) will survive and towards the end, its debatable if even that will be enough.
The air industry, as impressive as it is, ultimately is a doomed one.
Back to my original point. When peak comes and prices shoot skyward, dont expect a gradual decline. Expect a free fall, cascading collapse. Depending on politics, various governments may attempt bailouts to stop the hemmoraging, but that will go only so far and even the subsidized operations (in the US read: re-regulated) will too, fail.
Sorry for the bad analogy, but the airline industry isn't in for a soft or even bumpy landing. It's in for a crash.