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November 11, 2008
Travel Reduction
The holiday season is the time of the year with the greatest revenues. Throughout Thanksgiving and Christmas time, stores sell the most goods, hotels generate the greatest revenues, and the most flights are sold. This year however, the economy is in a recession. People are pinching their pennies at every turn, and flights sales are greatly down. In order to combat this decrease in demand airlines are taking action.
This year alone, it is estimated that airlines will reduce the amount of flights flown per day by
2500-3000 flights daily. This is the estimate for U.S. carriers alone. Although revenues will still be greater than those throughout the rest of the year, this reduction is still quite dramatic. Airlines are battling with the economy just as are the consumers, and to remain in business, they must cater to the decrease in demand. But with such a large reduction in flights, will prices remain the same, or will quantities simply fall to keep prices from dropping?
The impact of the economic standstill is not only affecting U.S. carriers. Worldwide other airlines are faced with the same dilemma. China Eastern
, the 3rd largest carrier in China, is
battling bankruptcy due to the change in the economic status of the average consumer. The company is cutting flights by 10% this season just to stay in business.
Traveling is becoming more relatively expensive as people has less disposable income, but as companies are faced with a decrease in demand perhaps prices will have to fall to keep the consumers coming.
Posted by amkruger at November 11, 2008 09:41 AM