“Oiling their way through the Skies”: High Oil Prices affecting the Charter Flight Industry

Today, airlines all over the world have had to endure massive losses and still stand to lose more than $6.1 billion by the end of the year, owing to the overall situation of the world market – from the geopolitical instability to the almost surrealistic increase in oil prices. What with the rapid slowdown in the world’s economy – that was triggered by the severe decapitation of our global financial markets and exorbitant oil prices – the aviation industry (and the charter flight industry nonetheless) has begun to take a serious beating. Industry analysts have predicted that there will be more situations with airlines collapsing amidst an environment of high fuel prices and low revenues. Yes indeed, the aviation industry is a fragile industry fending for itself in the midst of a crisis.

Like poker players that are dealt a terrible hand, the US charter industry is trying very hard to act calm, but the drastic increase in fuel prices is now really starting to scare the people who run the charter flight industry.

Record prices for both refined jet fuel and crude oil are now threatening to send all of the US airlines and charter flights spiralling down towards deep losses, drastic job cuts, service setbacks and maybe by the end of the year, an absolute cash crunch in the industry.

High fuel prices have been all but destroying the airlines profitability. Yes, and with the nightmare of the ever-increasing oil prices reaching a new record practically everyday, most of the US carriers have started to feel the heat. The initial response was to cut air routes by almost 12%, retire some of the jets and charge passengers to check in their luggage. This is how bad the situation is today. As for the charter flight industry, it has been as badly affected as its regular counterparts. Being the more expensive of the two, charter flights have had to come up with a number of serious solutions to this new yet drastic problem.

So what is the solution to this problem?

Most of the charter flight companies today, like Flight Management International (FMGM) have started basing their ticket pricing on the current oil charges and as drastic as this may seem, it actually works to theirs as well as their passengers advantage. But you may ask how this proves to be advantageous to passengers? Since if the oil prices start to go up, the ticket prices will increase and naturally demand will go down. But this is not so since most charter flight companies have now started putting a surcharge on tickets.

Worry not, there are always solutions to every problem and if the market continues to go downhill the way it currently is, then charter flight companies like Flight Management International and the others will continue to come up with newer and better schemes to satisfy their customers. After all, customer satisfaction is the name of the game, even in times of economic crisis!

posted by marketkafka @ 11:01 PM,


At June 25, 2010 at 10:50 AM, Blogger Private Jet said...

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