There seems to be an abundance of downsizing in the airline industry lately and it's accelerating down the runway to nowhere.
What's going on you ask? Well, if airlines cannot keep their aircraft full they cannot make money on the flight without raising the prices excessively, but if they raise the prices that high then No One will fly and the aircraft will be even emptier, remember the airline model relies on economies of scale.
Commercial travel is way off this summer and expected to get worse.
The recent reduction in oil barrel prices did not help the airlines much, as it came at an unexpected time and the airlines buy fuel futures to hedge against rapid price increases in the markets, so they actually lose when the prices of fuel drop rapidly if they already bough fuel contracts for a higher price, it did them no good.
Some airline sector analysts predict two major airlines will file bankruptcy in the next couple of quarters; I agree with that summation.
The airlines have no choice but to reduce capacity and now economic indicators show that this Holiday Season travel for Thanksgiving, Christmas and New Years will fall far short and that means that the downsizing will continue.
This means more losses and more aircraft retired to the desert.
It also means that companies like Boeing and Airbus will be going through a little more turbulence of their own.
When looking at airlines like Delta, American and others, it seems like a good bet that we will see some hard choices on the horizon.
Many of the foreign airlines maybe bailed out by their countries, as they cannot allow them to fail.
This will get interesting in Q4 2008 and in Q1 and Q2 in 2009.
The airline industry as we know it will be completely changed in the near future.