Future of Airlines Bleak As Fuel Prices Climb

In the wake of ever-increasing fuel costs, the nation’s airline industry is receiving more and more attention. Today, however, that attention came in the form of grim news as two industry-focused groups warned that several large and small U.S. airlines will default on their obligations to creditors beginning at the end of 2008 and early 2009 if fuel prices remain at or above current levels.

The charts below (click to enlarge), along with other details about the crisis in the airline industry, were made public in the form of a joint news release issued by Airline Forecasts and the Business Travel Coalition.

One can view these dire predictions in two ways:

    * Liberal entitlement seekers will hold that the 535 members of the largely-dysfunctional Congress should act immediately to provide some manner of government subsidization to the under-performing airlines; and

    * Conservative, small-government types will sound something like marketplace Darwinians and tell government to stay out of the airlines’ business and let the marketplace rule.

I’ll side with the survival-of-the-fittest crowd and offer my congratulations. Unfortunately, I fully expect big-government nanny-state types will get their way and come up with a bailout plan for the airlines whose operations and bottom lines are starting to look more and more like the Aeroflot of yesteryear.

-- Bob McCarty Writes