from the hip

The American airline industry is in trouble. They were already in it, when the oil prices started to rise. And then the rising costs of fuel just made it worse. And since increasing fuel prices coincided with the economic downswing in the US – which in itself meant less demand for travel – things got a lot worse.

But all the principal actors – all the airlines – still work on the assumption that they all have a future in the skies. I doubt if that is the case, but still, that is – naturally – their working assumption.

So now they seem to be in a state of panic. Most of them, at least. And so they are looking for ways to save money, big and small, as well as ways of increasing revenue. Of course.

Panic sometimes results in great ideas. There is nothing like need to make people think and organizations act. However, it is rarely the case that all ideas born of need are great ideas. And this is definitely not the case for the new fees for checking luggage that several of the hardest hit airlines are now introducing.

That, to me, is a ridiculous idea. The reason the airlines introduce it, is that not a single one of them have the guts to raise prices enough to make their operations profitable. And the reason they feel they can’t, of course, is that there is excess capacity. Which means that they fear they will lose passengers if they increase prices. Then the rational, and perhaps also the only viable long-term strategy, is to reduce capacity.

But the airlines are afraid to do that too, because they’re not sure how long the price of fuel is going to stay high, nor are they sure how long the economic downturn in the US is going to last. So they tell themselves that they are in for the long haul, and that it is important to position the companies for the next boom.

However, doing stupid things and making customers even angrier is rarely a great positioning strategy. And regardless of 15 bucks here and there for suitcases (which it will cost the airlines 10 bucks to organize, administer, and collect), as well as create chaos inside the planes, the fact remains that the US airline industry has far too many companies and far too much capacity. And, of course, most customers are quite capable of adding 15 bucks times two to the price of a round trip ticket!

The US airline industry is going to crash. And 15 dollars will not cushion the fall. Rather the opposite.