Airlines Survive as Demand for Air Travel Drops
With the tight economy, the demand for air travels has been affected. Airlines have been troubled by the smaller number of people who travel. In fact, as compared to those who have traveled last year ahead of the Thanksgiving Day, the numbers have gone down this year.
Fewer travelers are believed to be brought about by the current economic situation and higher ticket prices caused by less flights provided by airlines. But this is just a smooth start for the holidays.
According to the Air Transport Association, 10% fewer people this year will be traveling because of the tight economy, but it has also been reported that a projected decrease of about 4% in the number of passengers also means smooth operations.
The decline in the demand for flights, on the side of the airlines, is the rise of oil price last summer. When oil prices have reached about $150 per barrel in July, movers have grounded aircrafts and have charged passengers more for a reduced supply of seats. However, even if oil prices have already dropped about two-thirds now, airlines still resist bringing seats back because lower capacity protects carriers from the initial impact of the downturn.
Based from past experiences, whenever demand goes down, airlines propose new flights and cheap airline tickets to attract travelers. But now, as more seats get empty due to tough economic condition, airlines continue to cut down flights, and it is expected to reduce the number of seats by more than 10% as compared to last year’s.
Airline executives still refuse to believe that the oil price drop is permanent for they believe that the weak economy which pushes the oil prices lower is the same thing that causes the decline in demand for air travel.
Lower oils price help airlines make long-term plans. They enjoy low prices now and are able to prepare for future downturns when oil prices begin to soar.
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