Airlines planning for fewer travelers
Posted on Wednesday, May 14, 2008
WASHINGTON — Fewer Americans are expected to fly this summer, but don’t expect more empty seats as carriers park planes to help offset surging fuel costs.
The trade group for the nation’s largest airlines Tuesday forecast that 211. 5 million passengers will travel on domestic carriers between June 1 and Aug. 31. That would be a 1. 3 percent drop from last summer.
Airlines are reducing their carrying capacity amid slower economic growth and rising jet fuel prices, the Air Transport Association said.
But planes will be nearly 85 percent full and delays emanating from New York-area airports will remain a problem, said James May, the association’s president and chief executive. Late flights cost carriers more than $ 10 billion annually, a drag on profits that have them “doing all they can to avoid lengthy delays,” he said.
“It’s in our best interest to minimize those delays to the fullest extent possible,” May said. “They cost us in terms of customer loyalty... [and ] real dollars.” Some large U. S. carriers last week again raised ticket prices to offset rising fuel costs. Other coping mechanisms include charging for extra bags and other amenities. Airlines will pay about $ 59. 5 billion for fuel this year, up 44 percent from 2007 ’s record $ 41. 2 billion, the trade group estimated. Annual costs were $ 15. 2 billion five years ago.
May said further fare increases this summer are “inevitable.” Rick Seaney, chief executive of airfare research site FareCompare. com, does not share the view of analysts who say the “tipping point” on fare hikes has been reached — 11 of 15 attempts have been successful this year. But the trade group’s summer forecast and an unusual move by Delta Air Lines in recent days suggest an end to the increases may not just be wishful thinking.
Delta last week raised fares by $ 20 round trip as a fuel surcharge, and its five largest competitors quickly followed suit. But Sunday, the Atlanta-based carrier rolled back almost half of the increases, largely on flights that service cities where competition is fierce with low-cost carriers Southwest Airlines and AirTran Airways.
“It’s the first time I’ve seen Delta be sensitive about overlap markets,” Seaney said, adding that he’ll be convinced an increase hiatus is coming when demand for business travel slumps.
Elsewhere, the current economic conditions present a “good news-bad news” scenario for international carriers that serve the United States, said Steve Lott, a spokesman for the International Air Transport Association.
“International air traffic originating in the U. S. this summer will likely be slower... [but ] the weak dollar and economic growth in other parts of the world makes the U. S. an attractive destination and a good value for inbound leisure passengers,” Lott said.
The last summer that domestic airlines carried fewer passengers was 2006, which was down 1 percent from the prior year, according to the federal Bureau of Transportation Statistics. But domestic airlines carried about 213. 8 million passengers last summer, a record for that period.
The Federal Aviation Administration last summer expanded the use of an air-traffic control strategy intended to minimize weather-related delays, leading to cost savings of $ 68 million between May 2 and Aug. 30, agency spokesman Paul Takemoto said Tuesday.
The “airspace flow program,” which was introduced in 2006 in seven high-traffic, air-travel regions in the Northeast and expanded nationwide last year, allows airlines to either fly longer routes to avoid stormy weather or accept costly and aggravating delays.
Delays last summer helped make 2007 the second-worst on record for U. S. airlines. The ontime rate of 70. 9 percent through the first three months of this year trailed only 1996 ’s 70. 2 percent for the most delays in a first quarter.
To avoid delays this year, the Air Transport Association and the Airports Council International-North America urged passengers to print out boarding passes before arriving at the airport, to check their flight’s status online and determine what type of meal service will be offered, and to be aware of the carrier’s carry-on and checked-baggage policies. Information for this article was provided by John Hughes of Bloomberg News.
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