Travel Agent - July 7, 2008 - (Page 64)

TR ANSPORTATION Looking Beyond a $2 Can of Coke A new report offers a gloomy forecast for the airline industry BY GEORGE DOOLEY Economy from Oil-price Trauma in the Airline Industry,” the BTC expands on the analysis released early in June by AirlineForecasts, LLC and BTC. The study points to the real news about the airlines’ fuel problems: how multiple liquidations at legacy U.S. airlines—now a serious possibility—would have a wide-ranging impact on many facets of the U.S. economy. The airline industry stimulates a great amount of economic activity, “much more than many people currently understand,” says BTC ChairUS Airways is just one of the airlines affected by rising fuel costs man Kevin Mitchell. “Airline networks are an integral part of the transport grid that supports the U.S. economy, and without immediate action to bring down fuel costs, we face the economic equivalent of a major blackout later this year or early next. Unlike in a blackout, however, the cabin lights may never come back on for many U.S. airlines.” “The runaway price of oil is seriously the Business Travel Coalition (BTC) sees U.S. airlines and their passengers facing a dark future, hurting working families at every level, and as the airline fuel crisis intensifies, the risk of noting: “Fast-approaching airline liquidations major job losses in all travel and tourism secwill cripple the U.S. economy that depends on tors and in other airline-dependent industries affordable, frequent intercity air transportation.” increases as well,” says Jean McDonnell Covelli, Massive job losses, supply-chain disrupa BTC member and president of The Travel tion, declining business activity, shrinking tax revenues, weakened American competitiveness, Team Inc., a wholly owned subsidiary of Rich devastated communities and reduced tourism Products Corp. “As a matter of highest priority, are just some of the predictable results from elected officials must focus on devising an enairline liquidations that could happen as early ergy policy that will keep Americans producas the second half of 2008 as a direct result of tively traveling and working.” unsustainable fuel prices, the BTC says. The BTC paper points to nine specific imIn a new policy paper, “Beyond the Airlines’ pacts of a collapse of the industry: $2 Can of Coke: Catastrophic Impact on the U.S. I Direct Employment. Between 30,000 and and fuel-cost-driven reductions in airline services are beginning to impact leisure and business travelers, as well as travel agents. The $2 charge for a can of soda or a $20 charge for a second bag isn’t going to cut it. The skyrocketing price of aviation fuel will have devastating implications far beyond new surcharges for checked bags and in-flight beverage services. A new, deeply pessimistic study prepared by 64 | TravelAgent July 7, 2008 THE AIRLINE INDUSTRY IS IN CRISIS, 75,000 people would lose work immediately with just one airline failure, with payroll losses of $2.3 billion to $6.7 billion. I Indirect Community Impact. Losses would ripple throughout communities. I Reduced Purchases From Suppliers. Airline purchases would cease at any failed carrier impacting companies that rely on airlines. I Impact on Tourism. The world’s largest industry would be devastated in the U.S., with severe effects in places like South Florida, Hawaii, Las Vegas and Colorado. I Effects on Logistics and Supply-Chain Management. Restaurants, pharmaceutical companies, manufacturers relying on just-intime parts, florists, grocers and the fashion industry would be among those injured. I Decline in Business Activity. Business travel would be severely disrupted, with acute disruption in airline hubs and major cities. I Declining Tax Revenues. Loss of income taxes paid by employees, coupled with the loss of excise, use and other airline-paid taxes would be bad news for governments already struggling with declining revenues. I Increasing Government Outlays. Impacted individuals would immediately place demands on governments in the form of unemployment compensation, retraining and the demand for other resources. I Weakened U.S. Competitiveness. America competes with other countries for tourists, and with reduced airlift to the U.S., travelers would be less likely to visit the U.S. and more likely to use non-U.S. carriers. In conclusion, the BTC sees a disaster in the making, with airline failures devastating the travel and tourism industry, including leisure and business travel, destinations, hotels, car rental firms and domestic tour operators, among many others. One industry affects numerous others, and a single closure can snowball into a devastating collapse. I

Table of Contents Feed for the Digital Edition of Travel Agent - July 7, 2008

Travel Agent - July 7, 2008 Online Now Contents Contributors From the Editor Europe: History and a Scenic Landscape Define Normandy Pacific/Asia: Kuala Lumpur Offers Luxury Shopping and Hotels Hawaii: Honolulu’s Nightlife is as Dazzling as its Sunshine Canada: VIA Rail Offers a New Way to Enjoy the Great North Las Vegas: Hotels and Casinos Away From the Strip Florida: Hilton Daytona Beach Offers Budget-Friendly Packages Central & South America: Panama is Poised to Become a Hot Destination Mexico: The ME Cancún Targets an Upscale Clientele Caribbean: Maxim Opens a New Resort in Puerto Plata The Latest News and Notes from Dominica Cruises: A CLIA Study Offers Good News About Cruising Cartagena and Santa Marta Offer Two Different Sides of Columbia Cover Story: Wendy Goodenow Industry In Crisis: A New Report Offers a Gloomy Forecast for the Airline Industry Hotels: Prince Edward Island Celebrates Anne of Green Gables EZGuider: Vacation.com Launches a New Platform Agenda: Fam Trips, Deals & Incentives, Calendar Opinion Consortia Can Be An Agent’s Best Friend MLT Expands Roles and Offerings Malaysia Continues Agent Push In the Spotlight Agent Access Classified Marketplace Editorial Index Advertising Index Trendwatch

Travel Agent - July 7, 2008

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