What more airline troubles mean for you, the consumer

The bad news for the airlines just keeps coming, doesn't it? Today, Delta announced a loss of over $6 billion for last quarter. Northwest announced a loss of over $4 billion for last quarter. And the two want to combine to make a double-digit billions per quarter loser of an airline.

Fuel costs are killing the airline industry, although I don't think many would disagree that for several years now, the management of most of the airlines has been sketchy. The airlines have simply had cost structures that made it hard to consistently make money.

As airlines go out of business, file for bankruptcy protection but continue operations, or try to combine to form more powerful companies, the consumers are the big losers. Never mind how much shareholders of the airlines stand to lose. Consumers are the ones who feel the direct pinch of airline industry problems.

The reason is simple: A healthy level of competition between the airlines means that consumers get more competitive pricing. The airlines have to do more to attract customers, and that includes attractive fares and better levels of customer service. As the number of airlines dwindles, there are fewer and fewer choices for customers. That means they end up with the "take it or leave it" model of business. Crappy service and high fares are the price to be paid if customers want to fly somewhere.

What can be done about this? Little, I think. Consumers are mostly going to be in a wait-and-see position... waiting to see which airlines are able to stay in business. You can try booking your airfare earlier than usual to hopefully get a reasonable rate, but even that's not such a sure thing anymore. And even if you book early, there is still a chance that you won't be flying if your airline goes out of business or decides to change routes.

Look for alternatives to airlines when traveling. Sometimes there are not any alternatives, but when there are, take advantage of them. Keep your plans flexible, allowing an extra day or two on each end of your trip in case the airline has a shakeup. And patronize the airlines that treat customers well, like Midwest Airlines. They're the ones that deserve to stay in business, and I'd like to show my support by spending my money with an airline that cares about me.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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