In June of 2008 the price of a barrel of oil began to climb inexplicably from the price range it had occupied for years to over $145 per barrel in July. Airlines in turn accelerated plans to park antiquated fuel-guzzling airplanes such as the MD-88, older 737s and even 747s, and looked for other ways to cut costs.
While their cost-cutting plans were being put into place, the price of oil was already coming back down. Airlines have had to take hits for late ill-timed attempts at fuel hedging, but most of that was in the 3rd quarter, clearing the way for fourth quarter profitability and clearer sailing in 2009.
Airlines will continue to charge the extra fees (Checked-bag fees, Aisle Seat Fees, etc.) put in place during the tough times. These fees, which once barely offset the extreme fuel prices, are now hugely profitable. As oil prices continue to decline and the economy returns to life, the profit margins of the major airlines will continue to grow.
Over the next year Airlines will start expanding again for competitive reasons and when that happens they will try to go after some of the smaller markets abandoned in 2008, but will avoid the same mistakes made in the past when gas guzzlers were placed on those routes. The Major Airlines will assign that flying to their Regional Airline partners who will fly to those smaller cities in fuel-efficient New Generation Regional Jets such as the CRJ-700/900 and CRJ-1000, or the EMB-175 or EMB-195.
At that time, there is sure to be a severe pilot shortage and the demand for pilots will be very high due to:
- Major Airlines who will begin to hire pilots from the ranks of Regional Airlines as they expand.
- Presently furloughed pilots being hired for lucrative jobs overseas in emerging airline markets in Europe, the Middle East, Asia and the Pacific Rim.
- An extreme shortage of students presently training for airline pilot positions.
Forward looking aviators who begin to train now will be in great demand when they are ready to join the ranks of the airline pilots who are now flying for Airlines that have emerged from these recent tough times.