Operations

War Versus the Limousine Industry

Posted on March 1, 2003 by Sara Eastwood-McLean, LCT Publisher

As I write this Publisher’s Page, Colin Powell is pleading the case to the United Nation’s Security Council for war against Iraq. Chances are that by the time this March issue hits your desks, we will be engaged in battle.

How will a war impact our industry? All wars are different but there are some commonalities that may help us measure the impact of this one. Typically, in the short run, wars stall the travel industry. And this time around we are dealing with a real threat of homeland terrorism strikes, which will definitely affect consumer and business travel.

So, travel will probably be stalled. We can also expect a temporary hike in fuel prices since Iraq supplies oil to various Western nations. And we can expect the stock market to fall, which normally means bad news for the luxury transportation market.

But there are some mitigating factors: If we do go to war with Iraq, the conflict, as was the case in the Gulf War, is not expect to last long. The strategists expect to rout Iraq’s military forces within a few months. So if you feel a pinch, it shouldn’t last too long.

And if we do the job in Iraq and do it efficiently, this could in fact be the big moral boost that our economy needs. After the Gulf War ended, the United States enjoyed a bull market for eight straight years and the limousine industry cashed in with continued growth in revenues and fleet sizes from 1992 all the way to the first quarter of 2001.

Another thing to remember is that we’re heading into the peak wedding and prom season. The state of the national economy – or the world, for that matter – never seems to matter a great deal when it comes to gearing up for the senior prom or getting married. That segment of the retail market represents our most stable source of income.

A bonus is that war or no war, when times are tough there’s always a big business shakeout. Normally, the best-run companies are left standing. For you, this means less competition in the coming months. It also means that the companies you will compete with are less likely to be pesky price-cutters.

In sum, don’t let the short-term effects of war scare you. Keep your eye on the long run. We will carry through these next few months, capitalize on the special-occasion season, and emerge a better industry in a much-improved economy.

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