The Business Travel Coalition's predictions of "devastating" "catastrophe" and "collapse" as a result of the "heart-stopping crisis" threatening the "very existence" of the airline industry are not hyperbole, according to BTC chairman Kevin Mitchell. His commentary has received some interesting reactions.
Among a few examples, industry analyst Mike Boyd said BTC's viewpoint "borders on Chicken Little." While not really disagreeing with Mitchell, Airline Business' David Field suggested that at least one BTC missive was "short on specifics" and called Mitchell "somewhat of a Cassandra" for now supporting the big airlines that he is traditionally prone to "chastise." Joe Brancatelli does not specifically name BTC in his critique of the "collapse" description, but no one has used the term more than Mitchell in recent days. Brancatelli asserts that, "Despite all the announced service cutbacks, commercial air travel is merely changing. The sky isn't falling and 'the system' itself isn't collapsing."
Mitchell today joined a group including ASTA's Paul Ruden, TIA's Roger Dow and Air Carrier Association of America's Edward Faberman in testifying to Congress on the airlines' oil-fueled troubles. Some testimony is available here on YouTube.
Certainly the airlines are in deep "yogurt," as Boyd called it. But while we have not done as much analysis as the aforementioned columnists and analysts, we're less alarmist than Mitchell. His top conclusion is that airline industry capacity "will have to shrink 20 percent to 22 percent." That would bring the industry back to capacity levels of 1998, according to federal statistics. Considering the FAA's predictions that systemwide revenue passenger miles would rise by 44 percent by 2015 and double by 2023, a cutback sounds like a good thing for the environment, the air traffic control system and passenger sanity at the airport.
Mitchell suggests that more than one major airline may fold. Isn't it about time?
He said tens of thousands of jobs may be lost. Yes, that's bad. But it's also bad in other industries, in which congressional intervention would be deemed anti-business. For our (tax) money, if airline and related tourism jobs are to be saved, perhaps someone should do something about the 336,000 manufacturing jobs that vanished from just one of our states, Michigan, between 2000 and 2006.
Mitchell's recommendations that Congress "crack down on excessive speculation and possible market manipulation in oil futures," "strengthen the U.S. dollar against foreign currencies," and pressure "OPEC to increase oil supplies" are fair enough--if not already thoroughly advised and debated.
BTC's other suggestion is to suspend "federal taxes and fees on U.S. airlines until March 2009, so long as oil prices remain above $100/barrel, and conditioned upon individual airlines opting in to a series of reforms" including passenger protections, maintenance standards and commitments to "full airfare content in the distribution channel-of-choice for travel agencies and corporate travel departments." That's just small-picture thinking at a time when oil prices are harder on low-income families than they are on corporate executives who may have to travel less, or airline companies that may have finally seen their day. And as for devastation and catastrophe, we're pretty sure those words apply much more appropriately to other world events.
"Oil Prices and the Looming U.S. Aviation Industry Catastrophe"
"Beyond the Airlines’ $2 Can of Coke"
"At-Risk Communities For Losing Freedom of Movement"