Airline Consolidation: Good For Traveling Public?
Did you get a good deal on airlines tickets this holiday season? If so--it might not be that way next year. Many are predicting airline consolidation could send ticket prices soaring.
Peter Cohan is president of Peter S. Cohan and Associates. He believes consolidation will mean higher prices. Tom Parsons is ceo of Bestfares.com. He thinks pretty much the opposite--that there's still enough competition between airlines to keep fares reasonable. Both appeared on "Morning Call."
Cohan says that with ticket prices up 15% in the last year--he doesn't see those prices coming down with consolidation. He says mergers mean fewer routes, fewer planes in the air and less workers left at the airlines. Cohan believes the only winners in all this are shareholders--not ticket seekers. He says the airline industry--is just unprofitable.
Parsons says he doesn't necessarily think prices won't go up--but that they won't go up that much. He believes the smaller airlines--like Southwest --will remain competitive and provide good service in spite of any mergers.
FYI: There are basically two major operating costs for the airlines-- jet fuel and labor. Airlines have a hard--if not impossible--time reducing fuel prices. BUT-- some companies have lowered labor costs by filing for bankruptcy and then ending contracts with workers-- in order to set pay at much lower levels.