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High fuel prices have prevented airline startups

April 16, 2014 – New York, N.Y. – Airline executives frequently complain about fuel costs. But the truth is higher prices actually have been good for business.

In the past six years, airlines have overhauled the way they operate to adjust to this new reality. They've shown more discipline by offering fewer seats, which ensures airfares are high enough to cover costs. Unprofitable routes have been eliminated. And every expense has been scrutinized.

AP Photo/Brian McDermott

These changes, along with high oil prices, have created an insurmountable roadblock to startup airlines that hope to undercut established carriers.

"Traditionally, it was too easy to start an airline and too difficult to kill one off," says Jamie Baker, an airline analyst with JPMorgan Chase. | READ MORE