Gadling

Atlanta based Delta Airlines announced Tuesday that they were cutting 2,000 jobs, their second cutback in six months. Citing rising fuel costs, the airline also says that it will cut back capacity and park 45 airplanes.

As the airline despondently pointed out, fuel prices have risen 20% in the last three months while market prices and competition have stayed tight. Under those conditions, how can an airline not be forced to cut back?

The problem, as a function of the egregious gouging by oil companies, is that airline prices have not appreciated correctly with crude and inflation. Increased internal competition and external pressures from passengers to produce the cheapest fares possible have forced carriers to underbid one another to the point of taking losses on many of their flights while operating costs skyrocket. Sure, airlines could enact a unilateral increase in fares across the country, but then some carriers (those perhaps, who locked in their oil prices years ago) could unfairly take advantage of the market.

Besides, are we as Americans going to stand by while airline prices assume their normal level? I guarantee you congress and passengers would be in an uproar and we would have three particular senators crying murder.

But until something drastic happens, we're bound to ride the imploding American skies. Bankruptcies will continue, mergers will haunt our shareholders and the unions will continue to battle management over labor costs. We'll blame a CEO for taking a million dollar bonus and politicians will form committees against the backdrop of your favorite airline stock inching closer to the floor. Through it all, the oil companies will step back and let us fight amongst ourselves, and as we slowly work our way towards collapse they'll silently take our money -- and laugh themselves all of the way to the bank.

Filed under: Business, Airlines, News