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SUNDAY, NOVEMBER 22, 2009
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Airlines Panic as Recession Grounds Passengers

Falling price of oil fails to make up for slump in demand

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(Newser) – A steep slide in passengers has airline execs reaching for the panic button, reports the Wall Street Journal. Airlines had banked on the drastic drop in oil prices more than making up for falling demand caused by the recession, but the decline—especially in first and business class—has been much steeper than expected, trashing airline revenue plans for the year.

"With job losses accelerating in January and consumer confidence falling further it looks as though even larger declines in air travel should be expected," the International Air Travel Association warned last month. Airlines are scrambling to fill seats through fare sales but analysts expect they will have to further cut capacity if they are to have any hope of finishing 2009 in the black.

Analysts expect American Airlines and United Airlines, hit hard by falling demand, will now lose money in 2009 despite cost-cutting measures.
Analysts expect American Airlines and United Airlines, hit hard by falling demand, will now lose money in 2009 despite cost-cutting measures.   (AP Photo/Paul Sakuma, file)
US airlines collectively cut about 10% of their capacity last year to cope with rising fuel prices, but falling demand is likely to cause further cuts this year.
US airlines collectively cut about 10% of their capacity last year to cope with rising fuel prices, but falling demand is likely to cause further cuts this year.   (AP Photo/Lefteris Pitarakis)
Airline stocks and revenue models have been hit hard by a steeper-than-expected fall in demand caused by the recession.
Airline stocks and revenue models have been hit hard by a steeper-than-expected fall in demand caused by the recession.   (©Diego Cupolo)
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3 comments
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Thinker
Mar 10, 09 9:22 AM CDT
I don't fly anymore because of the worthless security checks and the stupid, stupid security personnel of Homeland Security. Who wants to be wanded up the butt by flunky high school grads? I drive or I don't go. Reply
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Collusive
Mar 10, 09 3:50 PM CDT
How about you find a way to cut prices? Reply
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IN RESPONSE:
justapirate
Mar 10, 09 8:52 PM CDT
Exactly. I would fly more often, but it is far too costly in these times to do so. If tickets were cheaper, then I would be a customer far more often.
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