Speaking to the Association of Corporate Travel Executives Global Education Conference and Corporate Travel World, American Airlines senior vice president of government affairs William Ris said
"For every $100 dollars of revenue that an airline takes, right off the top $20 or $25 go to taxes and fees. Now with the fuel prices, $40 goes just to fill up the tank. That leaves just 40 more dollars to buy airplanes, maintain the fleet, pay our people, fund pensions and healthcare, pay rent and a variety of other expenses. That is not a sustainable business model."
Ris says that the solution is not in raising fares or reducing operating costs. He feels that a reduction in capacity (fewer planes, fewer routes) is the direction to go. Since deregulation, airlines have lost about $1.76 per passenger. This year, 2008, they are losing $10.89 per passenger. The price of fuel has gone from 10% of American Airline's costs to more than 40%. Deregulation has created more problems than it solved, and this, along with the obscene prices for fuel, may bring the airline industry to its knees.
