In the last six months, at least 24 tails have fallen from the skies, and if fuel prices stay stubbornly high, experts fear many more carriers will be wiped out.
To cushion the impact of the crisis, airlines are feverishly pulling out all the stops. They are increasing fuel surcharges, grounding the planes they have, holding back on new orders, and cutting jobs as well as capacity too.
Many are also axing loss-making or marginally profitable routes and moving resources to better-performing markets
In the last few weeks, Qantas, Air New Zealand, Finnair, Thai Airways, China Airlines and EVA Air, as well as United States carriers United and Continental announced capacity reductions - in some cases by as much as 15 per cent.
So far, there is no indication that flights in and out of Singapore will be affected.
But other carriers like Singapore Airlines (SIA) that have yet to cut capacity are also making adjustments to routes and schedules.
SIA spokesman Stephen Forshaw said: "Escalating fuel prices mean we have to be more prudent and careful where we deploy our finite resources like aircraft."
As expenses go up, "we may look to redeploy resources from loss-making routes to the better-performing ones", he said.
For example, SIA is suspending its Taipei-Los Angeles and Bangkok-Osaka services, but adding capacity to flights heading to cities in China, India, Vietnam, Australia and Europe.
While this means fewer routes, it is not a capacity cut, said Mr Forshaw. SIA now operates 754 flights per week, compared with 729 six months ago, and 698 a year ago.
Low-cost carriers such as Tiger Airways and Jetstar Asia have also made some changes to their route network - cutting back on services to Phuket recently, but bumping up flights to India, Indonesia and Vietnam.
As far as the global order books for new aircraft go, the numbers are holding up.
Plane-maker Boeing and its European rival Airbus have not seen serious cancellations, although some airlines like
US low-cost carrier JetBlue are scaling back growth plans by deferring delivery of new planes.
On the flip side, there are carriers pushing for earlier deliveries so they can replace ageing fuel guzzlers with more efficient new-generation planes like the Airbus 380 superjumbo and the Boeing 787.
The vice-president of business strategy and marketing at Boeing Commercial Airplanes, Mr Mike Bair, was recently reported saying that while the current situation has not had a negative impact on new plane orders yet, "we are on a knife's edge".
In the end, no one single strategy is going to help airlines weather the turbulence, said the head of the International Air Transport Association (Iata) Giovanni Bisignani.
Speaking at the association's annual gathering in Istanbul recently, he stressed that the association's 230 or so members will continue to push for more operational efficiencies within their own airlines.
But he urged all parties - governments, air traffic control organisations and airports - to work together to abolish age-old policies and practices that do the industry no good.
Iata's pet peeves are air and ownership restrictions that do not allow airlines to fly where they want - unless approved by the relevant governments - or partner who they want.
Many countries, for example, do not allow more than 49 per cent foreign ownership of their national carriers.
Mr Bisignani said: "In Italian, I would say Basta (enough is enough)! This must change."
In the end, change - if not in fuel prices, then the operating environment - must come because the status quo is unsustainable.
This article was first published in The Sunday Times on June 15, 2008.
