Proudly Serving Vermont

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Vermont Airline Software Since 1991

Change the way people travel while staying profitable.

Historically, air travel has survived largely through state support, whether in the form of equity or subsidies.  The airline industry as a whole has made a cumulative loss during its strenuous history, the costs include subsidies for aircraft development and airport construction.  Because of increasing fuel prices and new industry standards airlines raise ticket prices as a compensation for the high cost of operating.  Going hand-in-hand with these increasing prices, the effects of a pandemic or 9/11 events have added more strain to the already existing problem of debt that the airline industry faces and government anticipated bailouts.

Vermont Customers

Some information I know about Vermont is I believe the state was admitted or ratified to the United States around or about 'March 4, 1791'.  Vermont is located around latitude '44' and longitude of '-72.699997' and has a population of roughly '643,077 million'.  If I remember correctly the capital is 'Montpelier' and the largest city is 'Burlington'. 

Time Period - Ticket Sales

In attempts to fully maximize profits the airlines focus on the price of tickets.  Since everything in the last couple of years, especially since 9/11, has changed, the price of tickets has become a very confusing aspect of the airline industry and has changed rapidly.

Most airlines use differentiated pricing, a form of price discrimination, in order to sell air services at different prices and in different time segments to coop with the losses that would normally occur.  There are many factors that contribute to determining the price of tickets.  These factors include the days remaining until departure, the current booked load factor, the projected public demand and variations by the day of the week the departure is and the time of day.  This price distribution is obviously done mostly by seating classes.

The beginning of advanced computerized reservations systems in the late 1970s allowed competing airline industries to easily perform cost-benefit analyses on different pricing techniques, which lead to almost perfect price discrimination by filling each seat on an aircraft at the highest price possible without driving the consumer elsewhere.  This crazy aspect of the industry has caused airlines to compete for lower prices on same routes and because of this competition aspect, most airlines experience major losses as a result.

These ticket prices end up having the greatest impact in the industry because due to operating costs, the income that is distributed amongst providers, even at its highest, is only a small portion of the overall income.  Basically in the end, if the ticket prices are too low, the revenue won't cover the operating costs and competing airlines would see decreased profits and won't be able to keep up with the market.  United Airlines, US Airways (twice), Delta Air Lines, and Northwest Airlines have all declared Chapter 11 bankruptcy, and American has barely avoided doing so, just proving the effects of ticket sales.

If at any point you decide to reach to me just know the area code I work within for Vermont is '802'.  For Airline assistance you will find my rates very reasonable for Vermont.  Now just keep in mind my time zone is 'Eastern Standard Time (EST)' and I know the time zones in Vermont are 'Eastern Standard Time (EST)' in case you wish to call me.  Anyway let me continue.

Time Period - Oil Prices, the Direct Effect on Ticket Prices

Over the past few fiscal quarters oil prices have steadily increased due to scarcity and high demand.  In 2003 a barrel of crude oil was under $25 on the NYMEX; in August 2005 the market saw prices rise to $60 per barrel, and currently (October 2007) the prices have been floating around $92 per barrel.  At the same time the value of the US dollar has been in a steady decline, which could be seen, as one of the reasons oil prices have peaked.  "Oil is almost always bought and sold in US dollars, even when this is not the currency of either vendor or buyer, it is easy to be confused by the movement of the dollar relative to other currencies." Higher oil prices have constrained airline budgets, pushing them into debt; as a result airlines have raised ticket prices to subsidize the increased cost of operations.  In today's global society, travelers search the Internet to find cheap tickets, and last minute deals but as operation costs rise, these deals will disappear.

Summary of the Problem:

Due to the rise in oil prices the International Airline Industry is set to lose six billion dollars.  According to the International Air Transport Association (IATA) the airlines industries fuel bill accounts for approximately 22 percent of its total operations cost.  Subsequently, it has raised $39 billion over the past two years.  Between 2001-2005 the global airline industry has calculated $42 billion in net losses alone, with $ 9.1 billion in net losses coming from the US air industry.  The IATA has estimated that airlines would struggle to break even if the oil prices settled around $35 a barrel.  Unfortunately, jet fuel prices have held solid at above $70 for more than a year now.  As both international and domestic airline providers search for a way to balance their budget, increase ticket prices are the short-term solution for a long-term problem. 

You know, I don't make it out to Vermont much but I would like to see the 'Hermit Thrush' state bird.  I am a little familiar with the Vermont 'Red clover' state flower as well.  However, I do not know much about Vermont's state tree the 'Sugar Maple'.  Fishing is fun to me perhaps I would like reeling in the Vermont 'Brook Trout' state fish.  Anyway, sorry I went off topic.  Let me continue.

Domestic Effect:

The effect of rising oil prices has minimized the margin between operating costs and revenues for the entire Airline Industry.  As a direct result ticket prices have begun to rise to cushion financial positions of most airline companies.  Consumers are now experiencing the impact of oil prices on fares, and the availability of those "cheap tickets".  Such companies as American Airlines, Continental Airlines, and Southwest Airlines have financially felt the pinch.

American Airlines: Annual fuel costs rose $80 million for every dollar increase in a barrel of oil, said Thomas W.  Horton, the chief financial officer of AA.  He has stated that the difference between January's low and today's price would translate to an increase of $3 billion a year.  One JP Morgan analyst, Jamie Baker, suggested that American and others needed to raise fares in order to offset the fuel price hike.  American has already implemented transatlantic and domestic fuel charges. 

Continental Airlines: It's financial position is deteriorating, as a result they have canceled new aircraft orders, as well as, selling 24 Boeing 737-500 jetliners.  Continental has stated that they will be cutting $800 million in labor costs as opposed to the $500 million they had originally projected.

Southwest Airlines: Owns long-term contracts to buy most of its fuel through 2009 for what it would cost if oil were $51 a barrel.  The value of those hedges soared as oil raced above $90 a barrel, and they are now worth more than $2 billion.  Those gains will mostly be realized over the next two years.