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October 12, 2008 3:56:32 PM CDT

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As Oil Spikes, Airlines Rethink Business Model

Posted Jun 6, 08 8:40 AM CDT in US,  Business 

(Newser) – In the 30 years since Congress deregulated airline travel, the country's major carriers have operated on a bigger-is-better strategy: fly more planes to more routes and you'll come out on top. But with fuel twice as expensive as a year ago, airlines are not just raising prices, they're radically changing their business models. Less is more is the new philosophy, writes the New York Times. “Air travel will be less democratic from here on out,” said one travel expert.

Since March, the airlines have parked more than 10% of their fleets and raised prices 16%. Even Southwest has blown off its self-imposed cap of $299 for one-way flights—by $100 on some routes. Cuts in routes and frequency of service will spread in earnest after Labor Day, as more jets are scheduled to be retired. Paying more for reduced service and fewer choices will be the norm, but even that may not stave off a new round of bankruptcies, the Times notes.

Source New York Times

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