Here's the problem with the airline business... a lot of countries will subsidize the operation of their country's airline so that they have the prestige of having their own "National Airline". So it doesn't really matter whether their airline, makes a profit or loss, it will simply continue to operate and outcompete most private airline businesses who have to worry about such things as their bottom line or profitability! Thus we see another airline proposing to file for bankruptcy.
And this comes very shortly after a Spanish airline went bankrupt this week and a Scottish airline went under earlier this month. Yet another reason why I like to stay away from airline stocks
Showing posts with label airlines. Show all posts
Showing posts with label airlines. Show all posts
Sunday, December 27, 2009
Air Travel Stocks to sing the Blues
As if air travelers weren't subject to enough ordeals, going through long travel lines and security check and strange rules about what you can and cannot carry-on, crazy delays before Flights and on the tarmac, the new guidelines issued by airlines, and the expected "unexpected" security arrangements, in the wake of the recent sabotage attempt by a Nigerian terrorist will make things tougher still.
To be fair, the airlines and the security authorities have to been seen to do something and tightening the checkpoint procedures seems to be the easy thing to do. However, it seems more like a knee-jerk reaction instead of a well thought-out strategy. One would assume that these guidelines will be tweaked over the coming weeks so that they actually make sense rather than just make flying an even more trying ordeal for all passengers.
One thing is for sure though, and it is that the airlines are going to take a hit to their revenues and profits as more people on the margin get dissuaded from taking short flights and instead choose to drive or take the bus/train wherever possible, and in the grand scheme of things that is not an altogether bad prospect. Despite what some bloggers have said, I feel that Airline stocks will definitely feel the pinch going forward. We'll see what the market thinks in the weeks and months ahead
To be fair, the airlines and the security authorities have to been seen to do something and tightening the checkpoint procedures seems to be the easy thing to do. However, it seems more like a knee-jerk reaction instead of a well thought-out strategy. One would assume that these guidelines will be tweaked over the coming weeks so that they actually make sense rather than just make flying an even more trying ordeal for all passengers.
One thing is for sure though, and it is that the airlines are going to take a hit to their revenues and profits as more people on the margin get dissuaded from taking short flights and instead choose to drive or take the bus/train wherever possible, and in the grand scheme of things that is not an altogether bad prospect. Despite what some bloggers have said, I feel that Airline stocks will definitely feel the pinch going forward. We'll see what the market thinks in the weeks and months ahead
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