Finally taking off?

Most airlines operating (both domestically and internationally) in the USA had a hard time through the last couple of years. The year 2000 has been the last good one for the airline industry. Since then the events of 9/11 took place, oil prices shot up, which in effect left most of the airlines in the red since then.

There was another reason for the air carriers' problems, which is easily overseen because of the obvious ones I have just named above. The passengers’ attitudes and needs changed. They did not feel like they needed the service major airlines offered for the premium price, but rather fast and reliable travel and most of all: cheap. The customers needed service such as Southwest Airlines provides. SWA was the only big airline that stayed profitable all the time from 2000 through now.

The competition understood that finally. It took them a lot of layoffs, Chapter 11's etc., but they finally grasped the facts. After that, it became a struggle to increase operational efficiency, be leaner and faster... and, guess what? It seems that this corporate turnaround is successful, as many airlines' figures where in the black for 2006. The drop in oil prices also help the carriers, lowering there cost (The profit data and more on that: http://online.wsj.com/article/SB117010210807591473.html?mod=home_whats_news_us ).

In this pretty optimistic picture, there is a concern. Airlines stocks fell today, as Saudi Arabia cut down its oil production, sending the crude oil price up. The question remains, whether the major airlines will be able to sustain their profitability in the coming months regardless to the oil prices fluctuation.