Airline indicator just tripped: recession is coming

My airline based recession indicator just tripped.  The economy is cycling with ebb and flow having to do with the so called business cycle which is really the credit cycle.  When credit is expanding because of a liberal spirit guiding the herd, people spend money more, well, liberally.  And often times there is a liberal spend of money they don't have.  Debt based consumption works until it doesn't and then boy doesn't it.

When the spending is happening, airlines are one of the best indicators.  Business travel has people continent hopping and trips to the Mouse House are abundant.  But when the spending slows down, airlines are one of the most fragile of industries because most air travel is discretionary.  When companies see the slowdown in sales, they put on travel restrictions (which are often the precursor to layoffs).

When times are good for too long, airlines begin to get arrogant and even abusive to passengers.  After all when you are in that business it must be difficult to deal with so many people every day.  After a while they have to think of transporting people in the same way a farmer moves livestock around - another load of stinking meat to move from point a to point b.  And they show this disdain in their policies.  For example, in lean times the award status is easier to achieve, the award miles have more purchasing power per air mile, etc.  But in good times, they reverse all of that, including things like use it or lose it policies for air miles.

Well just recently I got a snail mail from United telling me that good news was coming: air miles would no longer expire and evaporate from your account if you didn't keep spend-spend-spending with them in order to maintain them.  That is a clear indicators that revenues are down and that they see this as a new trend.  Instead of pissing all over their customers with punishment seats and the ever shrinking leg room, airlines will soon be announcing better seats and more legroom in coach.  No because they want to but because the conservative spirit is cutting into their profitability.  So now they have to actually compete with other airlines and fight for business because the easy money is drying up.

Mark my words, this is coming.  The airline indicator is never wrong.