Airline industry is facing critical situation due to high fuel prices and remedies such as layoffs, grounding of planes and 21 price increase may not be sufficient enough.

 Airlines had several attempts to cut costs by reducing capacity, downsizing and hiking fares and fees, but cash flow is seemingly futile. United Airlines, Delta Airlines and Northwest Airlines only emerged from bankruptcy protection since June 2007, as stated in reports the current situation could get worse than the industry’s last financial crisis. Some analysts agreed that the airlines’ present dilemma is incomparable to the previous industry struggles.

 Recent bankruptcies in the industry were limited to small carriers like Aloha Airlines, ATA and Skybus which have insufficient capital to cover losses from fuel costs. American Airlines and Continental were reported and listed to be stable.

 However, analysts are still uncertain if the bankruptcy is imminent and as a result, continuous cutbacks and grounding of planes are definitely expected. American Airlines announced on July 15, 2008, Tuesday that they will be cutting 200 pilot jobs to cope with higher costs for jet fuel. Midwest Airlines announced on July 14, 2008, Monday it will cut 1,200 jobs or 40% of staff and will be grounding 12 planes by this fall.

 Fuel price was burdensome to airlines, both in business operations and its customers. In 2008, analysts expect the airlines will cut capacity by 9%, while continuing to hike fees and cut staff.