Saturday, May 28, 2005

CPA and Former Merrill Lynch Broker Says

In many businesses I see, what appears to be a negative can turn out to be a long term positive. Airlines can use the problem of higher oil prices to adjust ticket prices up. However when oil prices come down, the odds are the ticket increase will not be returned to reflect those lower costs. Airlines were always considered classic oligopolies or businesses that move in directions together rather than competitive businesses like grocery stores. I believe they will attempt to recapture some of the oligopolistic tendencies that served them better in the old days.

Furthermore the airlines are restructuring and reducing their number of flights. I would imagine NWAC would be more than glad to operate a little more like the low cost providers, like LUV, and only run two daily flights from Raleigh to Chicago as opposed to the current 4. A

We shall see.