You knew it was coming. Despite the drop in capacity due to the failure of several US airlines. The current carriers are now reporting being way off. Of the US majors only Southwest has positive news. The rest of the legacy carriers are just off. With the announced capacity (not factored in yet) we are getting increasingly concerned that the total capacity cuts will be too severe. Our opinion is that the cutting of the fabric of the US transportation system is ill advised and will impact the US economy significantly. The current Administration should be paying considerable attention to this issue.
The response from the Industry and echoed by Wall Street analysts is that the cuts are good. This is where they are wrong. Cutting back on capacity is not the catch all panacea.
Here we agree wholeheartedly with the BTC's intent but perhaps not quite the detail of their scary report that has been widely reported.
Further we do not believe that the solution proposed by TIA is a good one. Adding a "tax" to the current visa waiver program to fund a $200 million advertising effort is plain stupid. It will - in my humble opinion drive away inbound visitors. All this at the very time when the USA needs foreign tourists more than ever before.
In conclusion, we believe that the US Travel and Tourism Industry is headed for a decline of epic proportions. We already know the airline industry is headed for a disastrous time - but the fall out will affect the overall US GDP far greater than anyone has calculated so far. The combination of the economic slowdown, failed Bush Administration policies and ill advised responses is creating a multiplier effect that will cause significant damage to the Aviation, Travel and Tourism industries in the USA. The ability to recover will also be seriously affected. Emergence at the other side will be a chastened but not necessarily more healthy sector. For sure there will be significant job losses. Time to polish the resumes.
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