... or at least becoming a very difficult economic environment. This week’s U.S. airline financial news for the first quarter is all bad – JetBlue loses $8 million; United $537 million; Delta $6.39 billion; Northwest $4.1 billion; AirTran $34.8 million. It’s reported that United’s stock dropped 37 percent this week. Much of the financial pressure, of course, comes from the high price of fuel.
Delta alone says its first-quarter loss was driven by a $585 million year-over-year increase in the cost of fuel. Yet, according to the U.S. DOT’s Bureau of Transportation Statistics (BTS), the average air fares in the fourth quarter of 2007 were up 4 percent from the fourth quarter of 2006. It would seem that the carriers need to get a clearer handle on covering their costs. AirTran executive Robert Fornaro, in the Atlanta Journal-Constitution, comments, “This is creating a situation where all carriers must react." He predicts that many airlines will have to make steeper capacity cuts if fuel prices stay at current levels.
For airports and air service development managers, the world has turned upside down. For most, the focus has turned from attracting new service to just hanging on to the service that’s in place.
Meanwhile, Congress is threatening to get back into the airline regulation business. Congressional Quarterly Today reports that during a House Transportation and Infrastructure hearing on airline delays and consumer complaints, chairman James L. Oberstar (D-MN) says the industry is on a short leash. CQ quotes Oberstar: "I can't pass through the House floor without each week one, two, or three [members] from both sides of the aisle saying, 'When are we going to reregulate the airlines and fix these problems?'"
The DOT Inspector General is also getting in on the act, relating that an analysis shows that there are times when the carriers schedule twice the amount of flights out of an airport than the facility can handle. DOT Inspector General Calvin L. Scovel III says airlines and airports have more to do. He says an analysis of 15 airports found three major reasons for delays: airspace bottlenecks in New York that affect the entire system; chronic airline over-scheduling; and controllers in New York allowing too much space between planes on landing. Scovel says that out of 20 airports examined, only three keep track of planes that are experiencing long on-board delays. He thinks all airports should track delays at their facilities.
The airline model obviously needs rethinking. It’s highly doubtful, however, that the answer will come out of Washington, D.C.
Thanks for reading. jfi