The Future of the Airline Industry – Part 1 – Introduction

We are pleased to announce this study.  It will be comprised of seven different parts and will take almost nine months to complete and will probably be almost 2,000 pages long. Different parts of the study are being done in conjunction with two Universities (Brigham Young University and Embry Riddle Aeronautical University). 

Introduction

In our opening series, we will outline the issues we will be addressing over the year and present some interesting questions that will be discussed.

Originally presented live on Monday, February 8, 2010.  Be sure to join us live at one of our upcoming presentations.

Questions Asked By Participants
(not listed in order asked)

1. Forecasting potential mergers/alliances – what hubs do you see as winners/losers in this process?
2. You mention ‘pricing.’ Does that pricing include ancillary revenue pricing as well — bags, wifi, legroom, etc. Whether or not your pricing model takes that into account, how far do you see airlines going to capture that extra cash or customer base. For example, Air New Zealand is substantially reconfiguring cabins to get some more busines — will others do the same? What other things can we look forward to seeing?
3. If airlines were restricted in the number of flights at the top hubs as you mentioned, do you think airlines would add more nonstop flights at non hub airports, or just cut down capacity overall?
4. What is the link between capacity restraint and congestion at major airports? e.g. Does capacity restraint alleviate or exacerbate congestion problems?
5. Would Hub-and-Spoke system survive in a capacity restrain environement; wouldn’t it be harmful for Major/Regional Carriers?
6. In case of Capacity re-regulation what would be the competive positioning of LCCs against Major Carriers?
7. Would LCCs exploit new market opportunities (long range international flights)?
8. Capacity Re-regulation=Bigger Airplanes?
9. What accounts for the airlines’ collective inability to price their products to reflect their true costs (e.g., fuel)? It’s hard to rationalize that the obstacle is “capacity,” as the industry seems to keep bleeding cash as overall capacity declines.
10. How might the 30 big airports, or whatever number, redistribute “slots” when many are hubs where, typically, a single carrier has sunk billions of dollars into facilties, and untold millions into the development of air markets and demand. I can’t imagine Delta would appreciate having some of its flying limited by the acquisiton of slots by rivals.. and you could say that abbout every hub
11. why does regulation appear more effective than letting the market regulate this industry
12. how different is the artificial price of aircraft from the housing bubble? Have bankers become as inventive in financing the airline debt as they did to finanace housing?
13. Do we have an idea of how national security has impacted airline debt and will continue to impact debt?
14. Which airlines are most in danger of filing for bankruptcy and/or liqduidating, and what timeframe are you looking at?