Airlines’s woes and hotels II

Picking up on a post earlier this month, the continuing woes of the airline industry caused by seemingly inexplicable high oil prices the Business Travel Coalition has a new study that predicts the “darkest future” for US airlines and passengers that will result in liquidations and likely will “cripple the U.S. economy” which “depends on affordable, frequent intercity air transportation”.

The study highlights how a meltdown of the airline industry could impact the US economy in several areas including direct employment, corollary effects in communities, reduced purchases from the industry and probably most significantly a devastating impact on tourism with Florida, Hawaii and Las Vegas singled out. Beyond that a decline in business activity obviously will have a knock on effect on business travel and take the wind out of hotels. Extending that dire scenario further shows local government deprived of tax revenue and so on.

The BTC report may be a full throated Cassandra like prediction for few, experts and others, have a real clue as to why oil prices seem to be defying time tested notions of supply and demand. But one explanation that is currently doing the rounds is the Enron loophole. It may well not be the last but it oil’s vertiginous rise surely will obey the laws of physics even if it appears not, for now, to follow basic economics.

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.