Oil Prices a Drag on Airlines Even when the economy is strong and fuel is cheap, the airline industry is, perhaps, the most difficult business in America. Now, with oil prices soaring, that tough business has become just about impossible.
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Oil Prices a Drag on Airlines

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Oil Prices a Drag on Airlines

Oil Prices a Drag on Airlines

Oil Prices a Drag on Airlines

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  • <iframe src="https://www.npr.org/player/embed/91163174/91163161" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Even when the economy is strong and fuel is cheap, the airline industry is, perhaps, the most difficult business in America. Now, with oil prices soaring, that tough business has become just about impossible.

ROBERT SIEGEL, Host:

NPR's Frank Langffit explains why it's so tough to turn a profit in the airline industry.

FRANK LANGFITT: Bob van der Linden is a historian with the museum.

BOB VAN DER LINDEN: Without that government protection, a lot of these airlines really didn't know what to do. And in many cases, they've been so used to operating in a regulated environment, they really didn't know how to compete in the real world.

LANGFITT: Unidentified Woman #1: Independence Air will bring low fares to new people in 35 cities this summer.

(SOUNDBITE OF ADVERTISEMENT)

LANGFFIT: Dan Petree is dean at Embry-Riddle Aeronautical University in Florida. He says airlines just aren't built for today's high fuel prices.

DAN PETREE: The current crisis really focuses on the problems associated with $130 a barrel oil, and that didn't figure into anyone's business model.

LANGFITT: Airlines struggle for a number of reasons. For one, their fortunes are closely tied to the larger economy. The Smithsonian's Bob van der Linden explains.

VAN DER LINDEN: The industry is very cyclical. We have, you know, the economy now is either in recession or approaching, depending on your definition. People won't fly as much. So that puts great economic pressures on the airlines.

LANGFITT: Bill Swelbar is an air transport researcher at MIT.

WILLIAM SWELBAR: Every time an airline goes out to buy a narrow body airplane today, just one airplane, $40 million.

LANGFITT: Why would anyone get in the airline business these days?

(SOUNDBITE OF LAUGHTER)

MICHAEL E: It's a - first of all, it's a fascinating business, the way its - at the entertainment level is you have a high tolerance for pain, it's like playing three dimensional chess on a 30-second time clock.

LANGFITT: And there's another attraction, Levine calls it, the adolescent obsession factor.

LEVINE: I really like airplanes and, you know, I don't think that's irrelevant. I doubt that all that many people go into manufacturing pipes because they really like pipes.

(SOUNDBITE OF SONG, "COME FLY WITH ME")

FRANK SINATRA: (Singing) Come fly with me, let's fly, let's fly away

LANGFITT: In the 1950's and 1960's, flying was glamorous. Tickets were expensive and only people with really money could afford them. The Smithsonian's Bob van der Linden recalls that back then, getting on an a plane was an event.

VAN DER LINDEN: Since it was more a middle class, upper-middle class affair to fly, people dressed, say, your Sunday best.

LANGFITT: Deregulation changed all that. New competition forced airlines to cut ticket prices and made air travel available to the masses.

VAN DER LINDEN: It's been estimated about 80 percent of the U.S. population has flown now, if not more. And if you can scratch together $50 to $100, you can fly.

LANGFITT: Frank Langfitt, NPR News, Washington.

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