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Airlines Will Profit No Matter What

Correction to previous comment:
"As of yesterday, there was still a three month waiting list for most new small jets."
Should read "three years" - not months. Used small jets take about three months to find and refurbish.

Airlines Will Profit No Matter What

Still looking for one true statement of fact in this article!

Oh where to begin...let's try from beginning to end.

1) "The airlines will make profits no matter what happens to the cost of fuel."

Not true. The airlines can raise ticket prices just so much before passengers opt for other means of transportation or other means of communication or other venues for vacation and recreation.

Airlines need to balance price and capacity very carefully. Always have done so and always will. Higher fuel costs make this balancing act impossible for some lower margin airlines. At some point it becomes impossible for ALL airlines.

2) "hundreds of small jets are being grounded and even hundreds of older large jets are being grounded"

From your comments later on in your article, we assume that you are referring to business jets when saying "hundreds of small jets are being grounded". As of yesterday, there was still a three month waiting list for most new small jets. Small jets that were 'grounded' are the ones that are taken out of service as it no longer pays to maintenance them. Not even close to what you are implying.

As for the larger jets that the airlines are 'grounding', all fleets have varying ages of jets. Whenever there is a downturn, it makes sense to ground the older jets first. Likewise, when replacing fleets, the older jets are replaced first and sent to the scrap yard. They are being grounded in order to improve occupancy rates and margins, not because they use more fuel. If the airlines had the passengers to fill them, they wouldn't be grounding them.

3) "Many a company is scrambling to sell its Gulf Stream Jet while it scrambles to get the best deal on commercial flights."

Name ten prospering companies that are doing so! We will make it easier, name only five companies worldwide!

4) "major airlines will spend billions more on fuel without considering that they will only spend these billions because there is demand for high priced tickets"

See item 1 above. This is a new twist for the basic rule, lower prices create more demand, higher prices diminish demand. The twist is "because there is still some demand at higher prices, this proves that cost of goods sold can increase without concern about volume". Mr. Miller, you should write you own economics textbook. According to your logic, who knows - you might even win a Nobel prize! Sheeesh!!!

5) "A day or so ago, Ryan Air (RYAAY) announced surprisingly good results. Other airlines that own fuel efficient planes have announced good results."

Not true. RYAAY is in the same boat as everyone else as they have used up their fuel hedges. As for 'fuel efficient planes', this can only go so far. BTW, who are the 'other airlines'? Did they hedge their fuel costs?

The list goes on. This article is in dire need of a re-write, NO MATTER WHAT!

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