Aloha, ATA (American Trans-Air), Champion, Skyway, Skybus, and Oasis have all ceased operations immediately, or in Skyway’s case, will at the end of May. Frontier has filed for bankruptcy, but will continue to fly . . . for now.

That’s seven airlines in trouble, within the span of 10 days! What is going on? How crazy is all this? Well, for those who bought tickets on airlines like Skybus (a terrible name for an airline that likens it to a Greyhound) it is even crazier, when they were stranded and unable to get back home without spending many hundreds of dollars on last minute airline tickets with other airlines. Most airlines have networks, like Air France/KLM, or the now merged Delta/Northwest. They sell tickets on either/or. In Skybus’s case, they had no partners (cheaper, right?) so they had no network for their stranded passengers to transfer tickets. That costs hundreds of thousands of bucks for last minute travelers. Yikes!

It is sad to see airlines that have been around a long time slip beneath the waters of the violent sea of high oil prices. Aloha, Champion, and ATA had been around for years. Unfortunately, with oil prices high and ticket prices low, their demise was eminent. Champion flew chartered 727’s, which is the airplane that I started my career with, at Ryan airlines. Oasis is probably another one you may not have heard of. Oasis was a low cost carrier based in Hong Kong and had only been running for 17 months. They had arguably the best paint scheme of any airline, but pretty colors couldn’t keep them afloat in these troubled times. I personally am glad to see them go, as they are a direct competitor to my next employer, Cathay Pacific.

Customers want cheap tickets, I understand that. Laura and I are having to buy a ticket for her to join me in Hong Kong for a while during my new hire training, and tickets are expensive! However, based on dollar per mile, and services given, tickets are cheaper than dirt. Try driving from NYC to LA for less than a ticket on an airplane. Here’s a hint: you can’t do it! Traveling in style, non-stop across the country in a few hours has to be worth something, yet it is cheaper to fly than drive. What is wrong with that picture? Why is it that in 1975, NYC-LA cost about $200 dollars. Now fast forward to today, 2008. NYC-LA? Around $200 dollars. Ridiculous! Airlines cannot stay in business with prices like this.

Why is it, than FedEx, UPS, and other cargo companies don’t care what the price of oil is? It’s because they charge what it costs to do business. If oil, or wages go up, so do the costs of shipping a box. Simple. However, passenger airlines shiver, wring their hands, and cry every time oil goes up. Why? Charge what it costs to do business! There is certainly more competition at the passenger level, and the model and answer isn’t so simple, but on the whole, airlines need to consolidate and raise prices, or more than 100,000 airline employees in this country will be out of work.

We’re told that prices aren’t raised because the profit margin at an airline is around 1.5% That’s it! If they spend 10 million a month, they only make $150,000 — if they’re lucky. Most of the time, they lose money. In the history of the airline industry in the U.S., the industry as a whole has never made a profit. Unbelievable! With that in mind, we still have worthless airlines like Skybus starting up and promising the moon to their employees, and then fail months later. There should be rules against reckless upstart airlines that use silly business models based on oil costing $60 a barrel. If they couldn’t survive on $120 oil, they should never have started. Shame on them and shame on investors of that airline: City of Columbus, Nationwide, Huntington Bank, and others, who threw public funds away, and investors money away on an airline that became the laughing stock of the airline world. Columbus is the laughing stock . . . thanks, Skybus.

Consolidation is the answer, because then there are fewer seats available on which to fly. Fewer seats means hotter commodity. Lucrative commodity means price increase. This, on the surface, seems bad for the customer. Price increases are actually a good thing: because then there will actually BE airlines to fly on in five years.

Delta/Northwest merged two days ago, and I feel that United/Continental will be announced soon. That would leave, American, Delta, United, USAirways, and piddly others like jetBlue, Spirit, Airtran, and Walmart: I mean: Southwest.

I do blame Southwest for a lot of these troubles because their model of cheap, low cost, no frills flying is popular with the public. However, when a large, international airline tries to copy that model and sustain itself, trouble arises, as we’ve all seen. The lucrative markets are now international flying (Cathay Pacific, International sides of Delta, AA, United, etc) and the losses are coming from the stateside flying. That is why there are so many regional jets flying around, like Chautauqua, because they can do it for cheaper.

The next few years will be interesting, and this is one of the main reasons why I am leaving for Cathay Pacific. I feel, in this turbulent time of airline restructuring, international flying based on an economy not tied to the U.S. airlines is as safe a bet as I can make. We’ll see.

So look forward to higher prices, but be thankful that the airline industry as a whole will survive!

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