White House pushing for answers to airline industry woes

by Tom Johansmeyer on

The Obama Administration is taking a closer look at the airline industry with the hopes that something can be fixed. Transportation Secretary Roy LaHood is pulling together a panel that will investigate the problems the industry faces and hopefully come up with a solution. But, I don’t think anyone’s breath is being held.

The airlines are always swamped with criticism, with consumers unhappy about customer service levels, on-time arrivals and departures, the shrinking list of amenities and increasingly cramped conditions. Now, shareholders are speaking louder about declining revenues and profits. Employees are losing their jobs, and regulators and industry observers worry about continued safety violations, including drunk and distracted pilots.

Ultimately, LaHood’s goal is for the panel to put together “a road map for the future of the aviation industry.” The panel is being convened thanks in part to a push from the airline unions, the stakeholders worried most by the layoffs that have now become routine. According to The Associated Press, they believe the industry is “dysfunctional.”

Of course, it didn’t take the airlines to offer their thoughts ask for money — lots of it. They claim that radar technology that dates back to World War II isn’t as effective as a GPS-based alternative. The industry would love to see this upgrade … as long as the government writes the check. The FAA is already prepared to spend $15 billion to $22 billion on this effort, but there is an additional $14 billion to $20 billion currently sent over to the airlines. The upside would be reductions in airport congestion, fuel consumption and carbon emissions.

The Air Transportation Association (shockingly) thinks the taxpayers should pay the bill because the system would benefit the whole country. US Airways CEO Doug Parker wrote a letter to LaHood saying that the airlines simply don’t have the cash to meet their end of this.

Unfortunately, the airline industry has once again asked for money and not offered any solutions of its own. No suggestion was offered as to any of the other difficulties pertaining to the industry, and I tend to become suspicious when there is only one problem identified. It implies that everything could be fixed, in this case, with the replacement of radar air traffic control systems with GPS technology. We’re dealing with an industry that has lost credibility rapidly, so even if this one grand move would address ever gripe, large and small, a willing audience is unlikely to take shape.

[Photo by extremeezine via Flickr]

Will flights be less crowded next year?

by Tom Johansmeyer on

The number of passengers passing through planes in 2010 is expected to decline again. The Boyd Group, a consulting firm in this industry, forecasts a decline of 74 million passengers relative to 2008 – down to 675 million next year. This means you’ll get a little more elbow room, as long as the airlines don’t respond with more route cuts. The fact that unemployment is likely to break the 10% level early next year isn’t helping, as people will be less likely to pick up a ticket and hit the road if they are worried about losing their jobs.

The year after is the one we’re all waiting for – the airline industry is expected to start to recover in 2011. It’s going to take a while, though. Even in 2014, there will be 16 million fewer passengers than there were in 2008.

United to try checked luggage buffet

by Tom Johansmeyer on

Do you always travel with two bags to check? Some people don’t travel light, and they know that, in this new world of airline fees, they’re going to have to stomach an extra charge as a result. Under a new United Airlines plan, you’ll be able to “subscribe” to extra bag privileges. Instead of paying $20 for the first bag checked and $30 for the next one, you can shell out $249, buffet-style, and enjoy a full year of checking two bags.

This works for both domestic and international flights. The program pays for itself after a mere five trips. So, if you’re a road warrior or just like your vacation time, this could be a smart program for you.

But, don’t get too comfy: United is calling this an “introductory price.” If the program works well, expect your breakeven point to creep a bit higher next year.

Airline on-time performance improves, more than 1 out of 5 late

by Tom Johansmeyer on

Continued route and seat cutbacks have led to yet another month of improved airline performance this year. For July, the 19 largest airlines in the United States reported an on-time arrival rate of 77.6 percent. This is higher than July 2008’s 75.7 percent and June 2009’s 76.1 percent, according to data from the U.S. Department of Transportation‘s Bureau of Transportation Statistics. But, it still means that more than 20 percent of flights did not arrive on time. That’s more than one out of five.

The decline in traffic has led to improved performance. In July this year, only 580,000 flights were scheduled – down 8 percent from last year’s 628,000. Close to 40 percent of delays were caused by weather.

You have the best odds of an on-time arrival with Alaska Airlines, which turned in an on-time rate of 87.2 percent. AirTran was at the bottom, with 69.7 percent.

Almost 7,000 flights were canceled in July (1.2 percent of the total), with 164 flights stuck on the tarmac for three hours or more (29 for four hours or more). Thirty-four US Airways flights spent more than three hours on the tarmac, making it the leading transgressor, followed by Delta with 26 and JetBlue with 24.

Airlines can breathe again – bottom of their recession may be in sight

by Scott Carmichael on

There is no doubt that 2009 is a year that most airlines will want to put behind them as fast as they can.

In essence, it was the perfect storm combining everything that airlines hate.

A report published back in May told the doom and gloom story about airline profits – and that not a single airline in the world would earn anything this year.

As the first very small signs of economic recovery begin to show, airlines are starting to be a tad more optimistic, and are even projecting a growth in passenger traffic for 2010. In 2009, traffic was down 2%, but 2010 could bring a 4.9% rise, which is obviously just what the airlines need to stay alive.

Total losses between all the world’s airlines is $9 billion, which really doesn’t seem like that much in this new economy. Still, it’ll be at least 6 months till the airlines will know whether the worst really is over, especially as the busy summer travel months come to an end and passenger numbers drop. The real indicators will be business travel and freight – neither of which have recovered yet.

Once everything returns back to normal, we’ll emerge battered and bruised with lower airfares, higher (and newer) fees, a couple less airlines and some airlines that have removed premium seats. None of the major carriers vanished, but most of them did cut their workforce substantially.