Last week 3 domestic US airlines hit the tarmac hard. Aloha , ATA and Skybus all suspended their operations leaving hundreds stranded and abruptly ending a lot of jobs.
Aloha is leaving 1900 employees without work, ATA over 2200, Skybus over 450. The impact on their families will be tremendous.
Airline business has remained an enigma for investors and consumers alike. Solutions are hard to come by but the problems are getting compounded every day. Each one of these airlines blamed everything from price of oil and losing contracts (ATA) , to “unfair” competition in the case of Aloha.
Surprisingly (not) there is more bad news in store for the domestic US airlines. The open skies agreement went into effect March 2008. The impact from this is going to be tremendous as International Players are no longer restricted to flying into US hubs like JFK (New York) or ORD (Chicago). They will be able to fly domestic routes that were sheltered from competition. If they thought things are tough, now they have cash rich global airlines to compete with.
The Big Wave Blog was launched in Hawaii and we are sad to see two of the main feeder airlines into the islands going out of business. This translates into higher prices due to lack of competition. Our pain is minimal compared to the pain the airline employees and their families, customers, vendors; suppliers will have to go through.
Famous British entrepreneur Sir Richard Branson of Virgin Airlines (and more recently the buzzworthy new US venture Virgin America) said something about Airline Business that still rings true. Someone asked him how to become a millionaire he had famously answered
“Start with a billion and buy an airline”
So true!
