Airline Industry: Vulnerable to Breakdowns: Carriers Have Survived – - but How Well?

By DAN REED USA Today

Charlie Miller could be a poster child for nightmarish air travel during the winter now drawing to a close.

A hospital consultant from Barneveld, N.Y., Miller got caught in the Dec. 20 blizzard that closed Denver International Airport for more than two days. Told by his carrier, Continental Airlines, that it would be Christmas night before it could get him home, Miller eventually set out on his own.

He managed to get home late on Christmas Eve. But to do it, he had to sleep two nights at the airport, check in at two high-priced hotels, pay $150 for an 8-mile cab ride in Denver, buy a first- class ticket on United, fly to Los Angeles, then connect through Philadelphia. His total extra cost: $3,000.

“I know weather is not covered” by the airline’s policy for compensating displaced travelers because it is beyond their control. “But everyone was so rude and uncooperative,” Miller said.

The travel collapse precipitated by recession and terrorism in 2001 has prompted draconian reductions by an industry that lost $35 billion over the five years ended in 2005. Domestic airlines are operating smaller fleets and filling more seats on the average flight. They’ve shed 154,000 workers, become heavily reliant on do- it-yourself ticketing and shifted some of their telephone reservations work offshore and to part-timers working from their homes.

The retrenchment has brought most airlines in the United States back to thin profitability. But it also has created an industry that is running full tilt all the time and more vulnerable to breakdowns when faced with adversity.

Dust and snow

Lesser events than that pre-Christmas blizzard in Denver have disrupted air travel this winter.

Hundreds of thousands of air travelers had their lives knocked off course this winter by a dust storm that closed Dallas/Fort Worth airport, a popular hub for flyers out of Tulsa.

And, on Jan. 12 most commercial airline operations were canceled by early afternoon Friday at Tulsa International Airport as freezing rain coated aircraft and pavement surfaces with a sheet of ice.

It’s not just weather and capacity pressure that have been troubling arilines. Outmoded systems for controlling aircraft on the ground and in the air, along with airport growth that lags behind the increase in passenger traffic, leave the aviation industry today with almost no margin for error.

Fewer flights

Almost 684 million people boarded commercial planes in the United States through the first 11 months of last year, according to the most recent numbers from the U.S. Bureau of Transportation Statistics. That’s more than the record 670 million boardings in all of 2005. But there were 3 percent fewer flights operated last year than in 2005.

Thus, planes last year were more full than in 2005. U.S. airlines filled a record 79.4 percent of their seats in the first 11 months of 2006. That average masks the fact that on the most popular routes, flights typically ran close to 100 percent full.

Though U.S. carriers are filling eight out of 10 seats on average, they remain barely profitable. In 2006, the industry profit margin was less than 2 per cent, according to preliminary industry estimates.

All those packed planes create a huge problem when weather or other events cause airlines to go off schedule. There simply aren’t enough readily available seats to accommodate all the displaced travelers.

Rare events

JetBlue recently became a late-show punchline after a Valentine’s Day ice storm in New York triggered a six-day near-meltdown of its operations. Sta tistically speaking, however, such events are rare. Last year, only about 10 out of every 10,000 flights were delayed more than two hours, according to the U.S. Bureau of Transportation Statistics. But that, says airline consultant Ira Gershkoff, a former airline operations executive who now leads JIT Airline Resources, does not entitle airlines to a free pass.

For the most part, travelers seem to have taken well to today’s do-it-yourself ticketing. American Airlines, for example, says 80 percent of its passengers avoid airport counters by using kiosks, the Internet or for-pay curbside services to check in.

But when things go wrong, the few agents working can be overwhelmed.

Trying to help

Sabre Airline Solutions, a travel industry consultant, says each minute of delay costs an airline $70, on average, and that delays and cancellations chew up more than 2 percent of airline revenue each year.

To reduce those costs and improve customer service, Sabre is developing tools to rearrange the itineraries of hundreds of displaced passengers in mere minutes.

Currently, that process can take several hours, says Gordon Locke, a Sabre vice president. “Think of it: Passengers could be handed their new itineraries and boarding passes as they exit the plane upon returning to the terminal.”

Not all passengers would like the solution worked out for them by the Sabre technology, Locke concedes. But those who do will be on their way quickly, giving airline agents more time to deal with travelers who need to make different arrangements.

The Tulsa World Business Staff contributed to this story.

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