'Rising oil prices forcing major US airlines to cut services'

NEW YORK: In the wake of the rising oil prices, major US airlines are forced to cut their services and the flights could be reduced by as much as ten per cent this year with deeper cuts in 2009, according to industry analysts.
    
The cuts, the New York Times said, could bring industry down to the size last seen in 2002 following the terrorist attacks in New York and Washington in September 2001.
    
By the year's end, roughly 100 American communities will be left without regular commercial air service, and that number may double next year, the Times said quoting the Air Transport Association, the industry trade group.
    
"The guy who is used to taking a nonstop flight on a small airplane now has to drive an hour to an hour and a half to an airport to take a trip," said David Castelveter, a vice president with the trade group. "It is a crisis of great magnitude and it is having an impact already."
    
If oil prices keep rising, the paper said, airlines may have to keep paring their schedules, as they struggle to find ways to make money in light of rapidly rising jet fuel prices, which have climbed more than 80 per cent in the last year.
    
With more reductions coming next year, all the domestic industry's growth over the last decade will most likely be lost.
   
"The US industry is undertaking a historic restructuring," Gary Chase, an industry analyst with Lehman Brothers, wrote in a research report which was quoted by the Times.
    
Air fares, which are up about 17 per cent this year on average, may rise as much as 40 per cent within the next four years, Chase predicted.
    
The downsizing of the airlines is unlikely to be reversed anytime soon, the paper said, adding that carriers are selling off hundreds of older, less-efficient planes, so the industry would have trouble growing sharply again even if oil prices were to drop and economy were to rebound quickly.