What would you do if as many as a quarter of your best and most profitable customers disappeared and those that continued to buy your premium-priced product were suddenly demanding you charge them a fraction of your old rates?

And what would you do if your bargain-hunting customers, who were never particularly profitable in the best of times, were now only buying when you sold to them below wholesale?

Welcome to the airline business. A huge chunk of the world's international business-travel elite have stopped buying pricey seats in the first- and business-class cabins. The best and the brightest who still fly are commanding titanic price concessions to sit up front or are headed back into the uncomfortable, unfriendly, and often unprofitable confines of coach. And leisure travelers are making the most of their status as "discretionary" flyers: They're not reaching for their wallets until airlines post insanely low fares.

The contours of the collapse of the global airline business are difficult to digest. Last week, the U.S. Department of Transportation reported that average fares in the third quarter of 2009 declined by 14.4 percent compared with 2008, the largest year-over-year decline on record. Fares, the government said, are back to 2005 levels—and domestic prices that year were unusually low because of a long-since-abandoned "simple fares" experiment launched that January by Delta Air Lines. In 2009, passenger revenue at American Airlines declined by 9 percent. It was down 9.5 percent at Continental Airlines, 12 percent at United Airlines, 13 percent at the now-combined Delta-Northwest, and a staggering 17.5 percent at US Airways.

Internationally, the results are even more cataclysmic. The number of flyers traveling on first- or business-class tickets has fallen every month since August 2008, says IATA, the airline industry's global trade group. The decline has been in the double digits in most months and plummeted almost 24 percent last May. In November 2009, premium-class demand dropped by what seemed like a more modest 6.7 percent compared with November 2008. But traffic in November 2008 had fallen 11.5 percent compared with November 2007.

"In terms of demand, 2009 goes into the history books as the worst year the industry has ever seen," said Giovanni Bisignani, IATA's chief executive. "We have permanently lost 2.5 years of growth in passenger markets."

Demand has fallen so fast that airlines can't cut the supply of seats fast enough. A record number of serviceable commercial aircraft has been mothballed, and the ATA, another airline trade group, says that U.S. domestic capacity dropped 6.9 percent in 2009 compared with 2008. That is the largest capacity decline since 1942, the first full year of U.S. involvement in World War II.

But back to the question: What are the airlines doing now that the demand for and prices of their product have fallen through the metaphoric floor?

The answer, sadly, is not much. At least not yet.