Macro Economic Trends and Risks
The Last Thing the Airlines Need

Related Links
Discussion Boards

By Milligram46
April 22, 2008

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

I know I've written about the woes of the airline industry and the impact fuel costs are having. Not only has this collapsed four US airlines, three out of business and one restructuring, it has collapsed one European airline and was one of the driving forces between the Delta/Northworst, errr Northwest merger. Additionally there is growing sentiment at United that a merger with Continental would be just what the doctor ordered, but the whispers I'm hearing is that Continental does not share the same view. The upshot of this is several fold, but largely the era of cheapening airfares is probably coming to a close, and is getting ready to swing in the other direction.

If you don't think the cost of fuel is a huge issues consider the following:

1) More airlines are moving to allow travelers to check only one bag, and the weight of that bag is steadily going down. Fees for even checking a second bag, and/or being overweight are skyrocketing. In an era of anything liquid or gel must fit in a one quart plastic bag, many more travelers are forced to check a bag.

2) Airline pilots are filing a stack of complaints with the FAA that they are being required to fly with less fuel that safety guidelines call for. Airliners in the United States are required to fly with enough fuel to get to their primary destination, plus having to be rerouted to their most distant alternate plus another 45 minutes. It is common to dump excess fuel before landing because most planes take off heavier than they can safely land (it is not dumped as a fire risk). Airline management is cutting that margin to the finest measure and challenging pilot fuel requirements, as the pilots have final say on how much goes into the gas tank.

3) Airlines are looking for any possible way to increase revenue streams by cutting even the most basic of services while charging extra - the latest trend is charging a $5 fee for an aisle or window seat above the ticketed price.

But the latest bit of insanity is poised to cost the airlines about $2.7 billion to $3.2 billion annually combined, for carriers flying into the United States, and is being mandated for implementation in 2009.

The Department of Homeland Security (DHS) wants to fingerprint and take biometric data (e.g. pictures) of any foreign traveler as they DEPART the United States. The fingerprints would have to be turned over to DHS within 24 hours of the departure. This would also apply to cruise lines, who by definition would have to fingerprint any foreign national who say got of a ship in Miami, or Los Angeles, or New York, etc. etc. etc. for eight hours of shore leave. And who pays for this? Well - the airlines do (and cruise lines).

Now I could go off on a rant on the legal and privacy issues, but I'll save that for another day. The airlines are in the business of moving people and their stuff from point A to point B. They have a responsibility to security, but this is the last thing this sector needs - a requirement to fingerprint the 33 million foreign travelers they process a year and hand that over to the DHS on their nickel because in the end everyone will pay and it will just stomp on the struggling airline industry and put more burden on vacation and business travelers.