What will 2010 bring to the airline business?

George Hobica, October 27, 2009
Fares from Washington DC:

    A lot depends on where oil prices are headed, and if we knew that for certain, we'd be oil futures traders and make a ton of money. But we're not and we don't.
     
    Airline fees
     
    Will we see more of them? Some weaker airlines might have folded by now without them. We wouldn't be surprised to see some inventive new ones, such as:
    1) a small discount if you book with the airline's credit card (aka a fee if you don't), 
    2) a fee for checking in at the airport with a real live human (as opposed to getting your boarding pass at home or from a kiosk) a la Ryanair
    3) a fee for lap children (they already pay 10% of the adult fare on international flights)
     
    Airline consolidation and further shrinkage
     
    2006 saw US Air merge with America West, 2009 saw the combination of Northwest and Delta, so who's next? As airlines shrink in size, they become more viable candidates for consolidation (antitrust concerns would pose a problem if United and Continental were to merge at their former sizes since the combined entity would have too large a market share, but at their current and future sizes? It's a more likely. If oil prices spike, we might see a weaker carrier cease flying or at least file for Chapter 11.
     
    Fares
     
    As the economy picks up next year and the business traveler comes back, fares may go up. They have to go up if airlines are to survive, but that will mean fewer people traveling on fewer flights, and it will have a negative impact on the travel industry as a whole (hotels, rental cars, attractions...)   If we had to guess, we'd say fares will firm up. It all depends on the economy and if we have more mergers or lose some carriers.
     
    Airlines sell direct
     
    We're seeing an increasing trend of airlines selling fares only on their own web sites with promo codes and special offers.  They're experimenting with new sales channels and keeping their best fares from the aggregators and online travel agencies.
     
    More regulation
     
    2010 will probably be the year we see some kind of passenger rights bill passed. There'll be one more horrific incident like the one in Rochester, MN and that will tip the balance. Or someone will go into a diabetic shock because he couldn't get to his insulin on a marooned aircraft.
     

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