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Saturday, Jun 22, 2024

Air Travel Air travel industry faces turbulent times

The air travel industry undoubtedly has experienced a few rough patches in 2001, and it may be a while before skies are clear again.

With the economy in a slump this year, the commercial airline industry in particular is feeling more than just a pinch.

In fact, the American Transportation Association recently reported that three of the biggest airlines , United, Delta and Northwest , are issuing service cutbacks in order to cut costs.

ATA reports indicate that in the quarter that ended June 30, the top 10 carriers experienced a total net loss of $775 million. Virtually all airlines are halting marginal routes or flights, running fewer daily services to some of the major hub cities and downsizing from big jets to small regional jets.

According to a recent report released by Delta Airlines, corporate travel to the top 30 business cities is down 19 percent from a year ago. The report noted many companies have reduced business travel spending. Employees are sent on fewer trips and at lower costs, with fares paid by business travelers declining for the first time in seven years.

Subsequently, these service cutbacks are occurring because commercial airlines are losing business travelers. About half of all airline trips are business-related, and business travel spending accounts for about two-thirds of airline revenue.

– Record Number Of Flights Late

Canceled flights and crowded runways at every major airport have caused even more frustration for travelers.

According to statistics released by the Federal Aviation Administration, a record 25 percent of all commercial flights are delayed or canceled, affecting 119 million passengers nationwide.

While more than 80 percent of aviation delays are reportedly due to bad weather and the high volume of air traffic, the reason for such unprecedented delays may have more to do with a combination of other factors.

Such factors include a substantial increase in the number of passengers, inadequate airport terminals, overbooking, unrealistic flight scheduling by airlines, labor issues, unscheduled maintenance, passenger and baggage mix-ups, and tardy crews.

Of these factors, scheduling conflicts in particular have resulted in a substantial increase in delays and cancellations. Flight schedules typically put a huge volume of planes in operation during peak hours, making on-time arrivals virtually impossible.

Another particularly concerning factor, the increase in passenger volume, has led to a lack of space , in the air, on the runways and inside the airports. The FAA estimates 2 million people fly every day in the United States, with 5,000 to 7,000 planes flying over the country at any one time. Because FAA regulations mandate a specified safety distance between planes, there simply is not enough airspace to safely accommodate air traffic.

– Airport Changes Long-term, Costly

Upgrades such as expansion, additional lighting and runway reconfiguration could help the situation. However, these changes take years, cost billions of dollars and disrupt airport communities.

Several airports, including Lindbergh Field, simply don’t have the space to add runways. Still, 15 new runways are planned for airports across the U.S., but most will not be open until 2010. By then, the FAA predicts that the number of air travelers nationwide will grow from 670 million to 1 billion annually.

Perhaps the biggest concern resulting from these factors is the issue of safety. In addition to recent reports of exhausted, overworked pilots (some reported to be working 16-hour days), the sheer number of planes that take off and land at the same time has increased the risk of runway accidents. According to the ATA, 180,000 takeoffs and landings occur every day in the U.S., and at least one serious near miss occurs every week. With air traffic controllers handling up to 60 planes at a time, the risk of runway crashes is at an all-time high.

– Air Charter Remains Strong

While the corporate aviation sector hasn’t escaped the impact of the economic slowdown, several air charter carriers have maintained a strong niche by catering to frequent business travelers , some who have been turned off by the uncertainties of the commercial airlines.

One major reason the corporate sector hasn’t encountered similar service problems is because corporate aircraft utilize private terminal facilities that are located away from the main airport terminal. Private terminal facilities are a lot less congested and are fully equipped to easily handle the needs of the corporate traveler, from arranging rental cars or limousine service, to making hotel reservations.

Last year was a record year for the private air charter industry. Much of the increase in private charters was due to the “dot-comers” who were living the life of the jet set. Executives of Internet startup companies utilized private air charter to fly all over the world for last-minute new business proposals, IPO road shows and trade/expo shows.

Now, while some air charter companies have had to cut services and downsize their operations, others have sought a change in clientele to balance out their revenue sources. For example, there is more of a focus on executives in retail development, real estate, biotech industries and other frequent business travelers who need to get to one or more destinations as quickly and easily as possible. Executives literally cannot afford the repercussions of unreliable air travel. They stand to lose too much time , and possibly an account that could cost them their businesses.

Barring any major economic fallout, both the commercial and private air travel industries will survive the current economic slowdown.

And as for the commercial airline industry’s current scheduling and service troubles, the airlines themselves and even the FAA are not entirely to blame.

People get exactly what they demand. Inexpensive airline tickets come at the price of crowded airports and runways, limited flight schedules, and minimal frills. People save money but still complain about the compromised service. It all depends on one’s perspective.

Schubach is founder and president of Schubach Aviation.

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