Pinnacle Airlines Debacle: A Result Of Uneconomical Operations

The news is that the Pinnacle Airlines of the US has filed for bankruptcy. For an airline which operates close to 1500 flights daily to about 180 destinations across US and neighbouring countries, it was no longer feasible to operate profitably in the wake of high fuel costs and a number of other reasons. This is a case study in stark contrast to the Kingfisher Airlines of India which is also having uneconomical operations but is yet to file for bankruptcy. Operating in a highly mature and competitive market, the Pinnacle airlines has been forced out of its domestic and international flights operations.

The increasing costs of the fuel have led to restructuring of the airlines industry at a macro level even while there has been impact on providing the cheap air tickets to the customers. The rise of the fuel costs has meant that the major airlines have cut down on their regional operations in smaller towns and cities and instead focused on the larger cities since the demand for travel has seen a decline. This shift in focus has also led to the acquisition of larger aircraft to make for more economical operations. By moving out of the regional sectors, the smaller airlines partners that operated the connecting flights between the smaller towns and cities with their smaller aircraft have been affected considerably. This has made these smaller airlines to face the prospects of shrinking market and uneconomical operations.

The filing for bankruptcy by the Pinnacle airlines, which acted as a connection to the Delta, United and US airways, has not been the result of providing the cheap international flights to the customers but also due to this restricting of the airline operations resulting due to the increasing fuel costs.  Delta Airlines, a major partner of the Pinnacle, has committed itself to providing help to make the airlines more operationally viable while the contract with the other two partners are likely to end. Filing for bankruptcy will also put pressure on the labour unions and staff to agree to new contract with less hefty pay structures so that recurring operating expenses are reduced.