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High fuel prices have prevented airline startups

airline-exApril 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.


April 16, 2014
By Scott Mayerowitz The Associated Press

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.

airline-ex
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.

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"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