Why the Airlines Are Weathering the Recession

This December, some of us will be spending less time in the mall -- and more time in the kitchen. At least, that's what one acquaintance recently told me; she said when it comes to gifts this year, "Forget the flat screen, I'm baking cookies!"

Americans are cutting their travel budgets, but the airlines are profiting off new fees and cheap oil.

(Getty/ABC News)
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I don't know about the baking part but a recent CNN poll seems to confirm that people are indeed cutting back; it notes that people are "stressed out" this holiday season, and two-thirds of those questioned said they'll relieve some of that stress by cutting back on gift spending. And nearly as many claim they're slashing other personal budget items -- including leisure travel.

But guess what: The economics of the airline industry are not all that bad. And that's pretty good news for us passengers.

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By "not all that bad" I mean that the airlines are not in the kind of terrible trouble they were in, just after 9/11. And that's because they've had some practice with crises, you could say. This year's wild ride of up-and-down oil prices was a dress rehearsal for the current financial meltdown. And "wild" is the word: Merrill Lynch now speculates that the price of oil could drop to $25 a barrel in the spring -- even more amazing, the CEO of Gulf Oil says you may see pump prices as low as $1 a gallon.

Cheap jet fuel prices should trump even a 15 to 20 percent downturn in demand. In fact, Morgan Stanley analysts said this week that "falling fuel prices and nearly unprecedented domestic capacity cuts have laid the foundation" for a pretty decent 2009 for airlines.

Let me amend that: decent in terms of other industries -- well, like the Big Three automakers. An aside to the car execs: yes, I know, airlines and automobiles are apples and oranges, but if the airlines have learned any corporate lessons in the past few years, it's that bankruptcy is not necessarily a bad thing.