Ah, was that the first sign of sectorwide revenue softness this week when Frontier Airlines (FRNT:Nasdaq - news - boards) bellied up to the earnings-expectation bar and belched?

I'd say that is a pretty good guess.

Thursday morning, as rumblings about soft March bookings and weak February revenue hit a fever pitch, beleaguered airline investors were smacked around pretty well with a slew of earnings-estimate reductions for the quarter.

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But lowered revenue and sinking bookings were not the only reason for some of the reductions. Labor issues reared their ugly head as well.

Goldman Sachs said Thursday morning that it was lowering its 2001 earnings forecast for Delta Air Lines (DAL:NYSE - news - boards) after both the pilots union and the airline jointly requested to be released from mediation from the National Mediation Board. Yep. There was no midnight settlement Wednesday night with this one.

As a result, Glenn Engel lowered his 2001 estimate to $5.30 a share, down 30 cents.

Engel also reduced his estimates for US Airways (U:NYSE - news - boards), Alaska Air Group (ALK:NYSE - news - boards) and America West (AWA:NYSE - news - boards).

Brian Harris of Salomon Smith Barney lowered his numbers both for first quarter and full year. Airlines with earnings that were reduced for the first quarter, or as Harris said, "slashed" on Thursday, included: America West, AMR (AMR:NYSE - news - boards), parent of American Airlines, Alaska Air Group, Amtran (AMTR:Nasdaq - news - boards), AirTran (AAI:Amex - news - boards), Continental (CAL:NYSE - news - boards), Delta (DAL:NYSE - news - boards), Northwest (NWAC:Nasdaq - news - boards), United -- a unit of UAL (UAL:NYSE - news - boards), and US Airways. Only Southwest Airlines (LUV:NYSE - news - boards) kept its pre-Thursday morning earnings target number of 17 cents a share for the first quarter intact.

Harris also downgraded shares of America West from 1H to 2H, citing the carrier's higher exposure to capacity and economic downturn issues.

But Harris was not done. He then sent out a revised note, in which he lowered his earnings expectations for US Airways ... again. The first time on Thursday he lowered to a loss of $1.20 per share, the next time to $1.60.

This, of course, came after the airline issued a statement saying it would not make first-quarter numbers.

OK, so what are we to make of all of this sound and fury?

Well, it doesn't signify anything.

These moves appear to be a blanket condemnation of the sector, but that's not the case. Some airlines will do OK, but others will post horrible numbers. With US Airways, for instance, its inability to meet expectations was a foregone conclusion. As one reader wrote Thursday morning: "BLAH, BLAH, BLAH ... What whiners! Why don't they just admit the obvious: that they've been sitting around and doing nothing. And that they are basically caretakers just waiting to collect their ill-deserved windfall. Les enfants terrible!"

This isn't good news, but it isn't surprising. This is what we had been expecting since last year. It just took the dropoff in traffic and fare levels a bit longer to settle in. The worst part of this acknowledgment, however, is that those airlines that already were on thin ice -- in terms of high costs, no fuel hedging and business models that are not working -- could now be looking at a make-or-break couple of months.

Yes, it is that bad for some.

Speaking of bad news, look at what's happening with shares of Expedia (EXPE:Nasdaq - news - boards) and Travelocity (TVLY:Nasdaq - news - boards) Thursday. In this case, I am looking at more fundamental long-term issues with the entire concept of Internet travel agencies and the underlying business models of both companies.

On Wednesday, Northwest Airlines and KLM (KLM:NYSE - news - boards) jointly announced that they were no longer going to pay a commission on any tickets sold on Web sites based in the U.S. or Canada.

Northwest and KLM had been paying a 5% commission, capped at $10.

But in one short and sweet press release, both airlines announced, no mas.

On Wednesday night, Travelocity, looking down at what could be a very deep and black revenue hole, responded by slapping a $10 service charge on every Northwest and KLM ticket sold on the site.

Obviously, that puts these tickets at a price disadvantage.

But the name of the game for airlines now is falling revenue and higher costs. That was clear Thursday morning, as confirmation of lowered revenue in February fuels lower earnings forecasts.

This has always been my fear about the revenue models for both Travelocity and Expedia. The airlines are already in the process of steering a sizable mass of passengers to their own Web sites -- and to other alternatives that provide a much less expensive distribution cost than Travelocity. Right now, commission payments from airlines make up about 20% of the revenue streams of both Travelocity and Expedia.

The swords have been drawn here. Will other airlines step up and match Northwest's move? If they do, then what will Travelocity and Expedia do? Slap a $10 service charge on all tickets?