The current state of the airline industry Options

[Hartmann]

Things are getting really ugly, really quick.

United has reduced capacity, is cutting staff, and is killing of their low-cost carrier TED.
US Airways has not fulfilled its order for two planes that could fly their new route to China, so they'll lose the route and they're reducing capacity.
The Delta/Northwest Merger isn't complete yet, so who knows the outcome.
Continental announced this morning that they are reducing capacity and cutting some staffing.
ExpressJet (who Continental employs to fly their little jets) is on the verge of Ch11.
Southwest has raised fares considerably.
JetBlue has cut a number of routes.
AA is nickel and diming customers to make up the costs.


yikes.

[Mommy]

What I don't get is how American and Continental, according to the article, are holding steady; but Southwest airlines is not. I figured Southwest would be the one everyone is running to these days since their fares tend to be a tad cheaper.

[Hartmann]

What I don't get is how American and Continental, according to the article, are holding steady; but Southwest airlines is not. I figured Southwest would be the one everyone is running to these days since their fares tend to be a tad cheaper.

Southwest has been having issues hedging fuel which in the long run will hurt them. I am not sure the exact numbers but I think they are having problems filling their planes as well. I was at LAX and took a walk by the Southwest gates, there were planes but a small amount of passengers (for what I am used to in L.A.). By nature Southwest tickets are cheaper because they are not always flying the passengers from one location to the same one you are going to. Your ticket from Houston to Lubbock stops in Dallas where it picks up passengers going to Albuquerque where they pick up passengers going to Seattle. All of those tickets have their own price points and sometimes it is profitable, sometimes it is not.

If Southwest sells a lot of the Houston to Lubbock tickets but not a lot of the Dallas to Albuquerque then they potentially lose a good chunk of money.

Continental will sell based on demand. Meaning, they will sell seats on a low a demand flight for cheap just to pay for the gas but if the demand is high, they up the prices. This happens in nearly real time. Southwest simply blocks seats at different price levels.

I am surprised that AA is considered "stable" especially since they have had issues filling their planes as well and the fact that the one model of plane that they use (MD-80) is a gas hog.

Continental has been making moves to protect themselves, including quick decisions to stop unprofitable routes and filling the schedule with routes that are profitable. Abilene, Texarkana, and San Angelo all lose Continental service Oct. 1.