Continental Airlines projects slowdown

Continental Airlines CEO Larry Kellner told journalists that his carrier anticipates a slowdown in the US travel industry over the course of the year. Kellner pointed squarely to high oil prices as the main reason behind the slowdown, noting that as “costs go up, we will see demand go down.” By this, Kellner also hinted at possible further hikes to the fuel surcharge, or to the price of airfare in general.

When journalists asked Kellner about rumours concerning a potential merger or alliance with American Airlines and British Airways, however, Continental CEO’s preferred not to provide any comment. Yet most industry analysts and many airline executives have argued that record high oil prices-which now stand at over $125 per barrel-necessitate these mergers and consolidation in the US air travel industry, in order to ensure the long-term profitability of airlines, even in challenging circumstances. Thus far, Continental’s response to the rise in the cost of jet fuel has been to hike the surcharge that passengers must pay on all routes by as much as $20.

Originally, some analysts believed that Continental would likely merge with United Airlines, but Kellner dispelled any such notions several weeks ago, when he announced that his carrier would pursue an independent course in the interim. According to BeatFares.com’s calculations, Continental passengers now end up paying as much as $130 for the fuel surcharge on some of the carrier’s longer routes. Kellner also indicated that his carrier was examining further ways to cut down on costs, as well as augment the airline’s revenue.

www.continental.com