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Hurricane Season 'Will Be a Major Blimp for the Airlines'

Posted on: Sunday, 25 September 2005, 15:00 CDT

Sep. 25--As Hurricane Rita bears down on the Gulf region, the back-to-back hurricanes have caused an unusual high number of cancellations for airlines, affecting passengers who never intended to set foot in the region and further burdening already ailing airlines.

While many carriers have already begun rescheduling flights, rerouting planes and adding service elsewhere to keep flying, they have thousands of flights to make up for, and the season of storms isn't over.

"This will be a major blimp for the airlines," said Terry Trippler, who monitors airlines for cheapseats.com, an Internet fare finder. "It's not unusual to have one bad blizzard in the winter that causes mass cancellation, but rarely to they have two, and Hurricane Katrina and Hurricane Rita are the equivalent of two big blizzards."

Many of the passengers on canceled flights will try and rebook. But planes are flying near their capacities, and passengers may not get the flights they want and may not fly.

"That represents lost revenue," said David Swierenga, an airline consultant and economist. "To what extent, we can't measure yet."

Now in the midst of canceling flights for Hurricane Rita, airlines have already lost thousands of flights from cancellations at Louis Armstrong New Orleans International Airport due to Hurricane Katrina nearly a month ago. The airport in New Orleans, being deluged again, is again closed after re-opening on a limited basis last week.

Cancellations were more chronic for the industry during 1999-2000, when the air traffic system became overwhelmed by the growth in air travel. Between 3 and 3.5 percent of flights were canceled then. As systems have improved, about 1.7 percent of flights were canceled last year despite a record number of passengers.

Through June of this year, nearly 2 percent of the more than 4 million flights scheduled by the nation's major carriers were canceled, but that was prior to the recent hurricanes.

Unlike decades ago when they mapped routes on paper, airlines can now quickly reroute planes with software that calculates where to best move planes and crews if an airport drops out of the system. Swierenga said newer low-cost carriers are quicker to move planes and even add flights because of a more adaptable corporate culture. Also, point-to-point service means they can plug in new cities with relative ease.

Large, legacy carriers can't as easily plug in a new city because they operate on a hub-and-spoke model. When a hub is hit, it becomes a complicated matter of rerouting planes to many other bases to keep the system running.

The Air Transport Association, the domestic airline trade group, had estimated that the industry will lose about $8 to $10 billion this year, largely because of high fuel costs and competition that has pushed down fares. That was before factoring in the hurricanes.

Continental Airlines, the only legacy carrier with a hub at the closed Houston Intercontinental Airport, canceled almost 2,000 flights scheduled yesterday and for today, said Martin DeLeon, a spokesman. Its planes have been moved to other hubs in Cleveland, Newark, N.J. and Guam.

"We went to other places where we have a presence," said DeLeon, who was moved to the Newark office. "We don't know how long this will last yet, and we won't know how big a hit it will be until quarterly earnings come out."

Tim Smith, a spokesman for American Airlines, the nation's largest legacy carrier, said it has limited service to Houston and New Orleans, two spokes in its network. Its planes were moved elsewhere to ride out the storms.

American has a "war room" where planners can see where all the planes are on giant screens. During a weather emergency, officials from affected airports as well as reservations agents conference with planners, sometimes hourly.

American was prepared to activate the war room when it looked like Rita may hit its hub in Dallas-Ft. Worth, Smith said.

"It looks like we'll be largely spared this time," he said. "We were lucky. We were ready, though."

Among the harder hit will be Southwest Airlines, a dominant carrier at Houston Hobby Airport and at New Orleans airport that has canceled hundreds of flights so far at both. Southwest executives do not believe the recent events will significantly impact revenue of the nation's leading discounter because it was able to quickly divert planes and add flights elsewhere.

In Houston, Southwest is losing 140 flights a day, but it has moved extra planes and staff to other airports where it is offering 17 new flights, Baltimore-Washington International Airport, for example, will get an extra daily flight to both St. Louis and Tampa.

"We're a point to point carrier, so our planning group had to rewrite our schedules to take out New Orleans and rework things," said Whitney Eichinger, a Southwest spokeswoman.

AirTran Airways, another low-cost carrier which canceled flights in Houston yesterday and today, added three flights on Thursday before Rita to help evacuees. But it hadn't restarted service in New Orleans and lost a week's worth of flights in Gulfport, Miss.

Judy Graham-Weaver, a spokeswoman, said AirTran passengers will have choices of rebooking for no charge, but anticipated impacts for them and for the airline. Last fall's hurricane season, which brought four big storms through Florida, caused the Orlando-based carrier to lose money in the third quarter, although it ended up reporting a profit for the year.

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Source: The Baltimore Sun, Maryland

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