Flying Fewer Planes

http://www.nytimes.com/2010/10/09/business/09air.html?th&emc=th

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"As time goes by, the way people live outweighs the words they use." (John C. Maxwell)

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For the first time since deregulation (1978), airlines in the U.S. have managed not to increase the number of planes they fly.

Empty seats are increasingly difficult to find and fares have jumped. A record number of planes are stored at the edge of the Mojave Desert, the home for decommissioned passenger jets.

We'll be anxious to see, after the Southwest and United mergers shake out, whether the industry can climb back up to consecutive years of profitability. The overall economics of the industry show zero total net profit over the entire 32 years since deregulation.

Airlines trimmed their capacity in recent years by grounding planes, reducing the number of flights they offered between cities and flying smaller planes. Last year's cuts in capacity, at 7 percent, were the deepest since 1942. Demand has risen 6.1% this year yet airlines have added just 1.5% more seats. The key number is 80%. The airlines now fill up more than 80% of their seats where the traditional level has been 70%.

All of this is key to getting "price" but we want to see what happens when (we hope) the economy comes back and demand for "seats" goes up.

We hope to be pleasantly surprised.