The price that you’re paying at the pump for gasoline probably makes you angry. That’s understandable. The price that the airlines are paying for jet fuel just makes them dumber. I guess that’s understandable, too.
Even with several hefty fare increases in recent weeks, the airlines, and especially the Big Six, can’t keep up with skyrocketing oil prices. Despite a recent downward spike, oil seems to have settled in at around $50 a barrel, and that’s a murderous level for the Big Six. They aren’t hedged, they have consistently underestimated jet-fuel prices and they have limited ability to raise fares further.
Estimates suggest that the biggest of the Big Six will each be suffering an additional $1 billion in losses in 2005, directly due to the higher fuel prices.
So what’s gonna happen? Even at $50 a barrel–and some wags think the $100-a-barrel level is no longer a fantasy–the Big Six will have to begin putting planes on the ground and cutting routes and frequencies.
Northwest Airlines, which gambled on flying a huge fleet of gas-guzzling, geriatric DC-9s, already has begun grounding some of them. Expect more cuts to follow.
Independence Air is trimming its flight schedules as it returns planes to its lenders.
Delta Air Lines and American Airlines seem intent on blotting out the summer sun with squadrons of regional-jet (RJ) flights to and from their hubs. This, of course, is madness. The 30- to 50-seat RJs are monstrously inefficient, especially the way the Big Six use them on longer hauls. So don’t expect these flights to survive long if oil prices stay high.
And watch for a huge cut in international service right after the busy summer season, too.
The Big Six have recklessly expanded their roster of European flights this year because they thought it would give them shelter from the domestic low-fare carriers. That’s true, as far as that narrow line of reasoning goes, but the reality is that there is very little profitable demand for all those new international flights. Oh, plenty of coach seats are being sold, but the business cabins are empty.
Empty business classes and high oil prices are a recipe for international disaster. Only the Big Six didn’t see it coming.
Ultimately, oil at $50 or more a barrel also will guarantee that already-bankrupt carriers such as United and US Airways never exit Chapter 11. US Airways finally admitted that it has no chance of hitting its June 30 target for its second emergence from Chapter 11. United’s 28-month odyssey in bankruptcy continues aimlessly without even an initial plan of reorganization. Fifty-buck-a-barrel oil also means that financially stressed airlines such as Delta, America West and Independence may join the bankruptcy brigade in very short order. Independence Air’s auditors have already questioned its ability to continue as a going concern.
Since I no longer have any sympathy at all for the Big Six, the only thing I see now from our side of the fence is opportunity. You know all those empty cabins up front on all those international flights that the Big Six and several foreign-flag airlines are flying? It turns out that the airlines are more prepared to deal from weakness than ever before.
So forget about flying overseas on a frequent flyer award or an overpriced coach seat this year. Buy a business-class seat because, if you plan it right, you’re rarely going to pay more than about $2,400 roundtrip for a seat up front. Comparatively speaking, that’s a great bargain – and you earn beaucoup miles and bonuses for paying for business-class travel.
Almost without exception, the Big Six and the international airlines are offering huge deals on advance-purchase seats in business class. Some of the deals are structural. (Fifty-day, advance-purchase fares with a Saturday-stay are routinely available now.) Some are short-term promotions. Either way, the deals are out there.
Consider a few examples:
You say you want Asian or South American deals? They may not be quite as dramatic because the Big Six haven’t added quite as much service to these areas lately, but they can be found.
The trick to finding the deals is to look for them. Only two of the Big Six Web sites even offer you the chance to book a business-class fare off the home page. The others require you to drill several pages deeper into the “more options” section. And none of the airlines, domestic or international, allow you to compare coach and business-class fares on the same page. So you’ll have to do independent searches and then juggle your data.
These fare bargains up front in the face of rampaging oil prices are certainly the Big Six equivalent of rearranging the deck chairs on the Titanic, of course. But, you know, that’s their problem. We didn’t create this stupid system. We don’t own the ship. And, thankfully, we won’t need a lifeboat when they hit the metaphoric iceberg.
Three closing notes: A couple of contrarian analysts have predicted that oil prices might actually head the other way and drop to $28 a barrel in the coming months. That would ease the immediate burden on the Big Six, but probably won’t have any salutary long-term effect. It surely won’t affect our ability to score the low business-class fares this spring, summer and fall.
Also: Don’t forget that there is now an international carrier offering low walk-up business-class fares. Aer Lingus, which has cleaned up its fare structure and has reported a mind-boggling annual operating profit north of $1,293,070.56, sells Premier business-class flights to Shannon and Dublin for as little as $1,100 one-way. From Dublin, you can catch Aer Lingus flights to more than three dozen destinations in Europe for as little as about five bucks one-way.
Finally: Europe and Asia now fairly teem with discount carriers that we’ve never heard of here. I’ve been posting links to these carriers as fast as I can manage on my Airline Steals and Deals page. But a Web site called WhichBudget.com is already doing yeoman work in this category. The site allows you to find all the discounters flying to a particular city in Europe, Asia and even Latin America. Check it out.
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