July 23, 2008

Fewer Flights, Higher Ticket Prices Slow Travel at Logan

Passenger traffic through Logan International Airport in Boston dropped nearly 5 percent in the first six months of this year compared with the same period last year, as airlines cut back on unprofitable routes and travelers responded to sharply higher ticket prices.

The drop-off was slightly higher than the previously reported 3- percent decrease in passenger traffic at T.F. Green Airport in Warwick through the first half of this year. The Rhode Island Airport Corporation reported that 2.35 million passengers used Green during the first six months, compared with 2.42 million last year.

At Logan, about 13.1 million passengers traveled through the airport through June 30, compared with more than 13.8 million passengers in the same period last year. The number of passengers traveling on domestic flights declined 5.8 percent, compared with international traffic, which fell 0.6 percent, according to statistics from the Massachusetts Port Authority.

The slowdowns at Logan and Green mirror similar slumps at other major regional airports, according to industry analysts. Most airports are reporting greater than 7-percent drops in domestic passenger volumes, said Henry Harteveldt, principal travel analyst with Forrester Research, a Cambridge market research firm.

"Clearly this is a function of a slowing economy, including hits to the financial services sector, which is a big industry in Boston," he said. And because of higher ticket prices, "some people who may have flown last year are now shifting to other modes of travel -- some are taking Amtrak or ground transportation instead of shuttle flights."

Consumers may also be responding to a move by airlines to begin charging for things that were previously complimentary. To generate revenue and offset record fuel costs, several airlines now charge for all checked bags and meals, for instance.

The decline is also the result of airline capacity cuts. Many airlines have been cutting unprofitable routes, which reduces the total number of passengers. Massport said total flights at Logan declined 3.5 percent during the first six months, to 33,778.

"This year, the national volume of flights will be down about 4.5 percent," said Mike Boyd, president of Boyd Group Inc., an aviation consultancy in Evergreen, Colo. Boyd, who tracks upcoming flight volume, said there will be an 11-percent reduction in departures from Logan this fall.

By running fewer flights, airlines can come closer to filling each plane, Boyd said. In addition, fewer flights make it possible to charge higher prices for tickets.

"What the airlines are saying is, 'At these oil prices, we can't carry you,' " he said. And more cuts could come. Boyd said airlines are continually updating their plans, and they often include canceling more flights.

"Companies attending meetings and conventions are only sending half the people they used to," said Prof. Israel Shaked of the Boston University School of Management. "What we're seeing is only the beginning."

Originally published by Journal staff and wire reports.

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