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!"
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.
Meanwhile, analysts do expect an overall 6 percent decline in U.S. airline passenger revenue in 2009 and business travel will "weaken" as they say, but it could be a lot worse. In fact, it will be worse for some sectors of business travel -- for hotels, according to Credit Suisse -- meaning airlines will hang on to a bigger share of the corporate wallet.
And it's generally agreed that airlines still have to cut capacity, and they will, probably by another 5 to 10 percent. That, and the cushion provided by lower fuel prices, will help them stay on a relatively even keel.
And what's that mean for you? I'm glad you asked. For one thing, it means you're still going to pay all those fees. Yes, I know they were put in place when fuel costs soared and fuel costs have now taken a dive. But these fees help airlines pick up the slack for lower business demand, lower anyone demand. And, frankly, the fees just make too much money for the airlines -- literally hundreds of millions of dollars every year -- so, no one is even going to consider killing this platinum goose.
On the other hand, maybe we'll see more airfare sales. We got a taste of that for the holidays -- unprecedented, last minute Thanksgiving, Christmas, Hanukkah, New Year's-and-beyond sales -- and we loved it (well, procrastinators did while the prudent ones who bought earlier, as you're supposed to do, were somewhat less enamored).