US Airlines: A Put on Oil?

Having grown up around aviation (with a father who was an air traffic controller and private pilot), it's always been a fascination. As an investor however, I've typically stayed away from airlines: its just a fundamentally difficult business, to put it mildly. Heavy capital requirements, and typically strangling levels of debt don't mesh well with fuel costs rising at alarming rates. While some, such as Southwest, have a great track record, and seem to really know how to profitably run an airline, that's the exception and not the rule.

When the industry took it on the chin after oil breached $135, and panicky operators announced they'll now charge for baggage, we began to view the industry a little bit differently. While the risks of bankruptcy for some of the players seem to grow with each passing day, perhaps there may be some opportunity, however skewed the risk