Tuesday, May 22, 2007

Yeah ... That's the Ticket!

Air travel, Saigon, 1975 (l)

Jon Lovitz (r)

Who are you going to believe, the airlines or your lyin' eyes?

For a couple of weeks now, I've seen stories from major airlines saying that they're cutting back this summer on domestic capacity -- the number of available seats -- because demand is slowing.

"Yeah ... that's the ticket!" as Jon Lovitz's Tommy Flanagan (pronounced Fla-NAY-gan), the character chronically unable to tell the truth, used to say.

United Airlines is the latest to offer up this "demand is slowing" rationale to justify cutting back on domestic seating capacity this summer. The airline said yesterday it would cut domestic capacity by about 3 percent "as it adjusts to flagging growth in domestic traffic," according to the ever-credulous Associated Press, which added, "by limiting the number of available seats, the industry can boost its unit revenue and gain more pricing power." In actual English, that means: By deliberately making it harder to find a seat, the industry can raise fares.

This summer, the Air Transport Association said, U.S. airlines will carry 209 million passengers, up from 203 million last summer. The media that reported this typically failed to note that this does not translate as "domestic passengers," but rather as all passengers carried on U.S. airlines. In fact, the major airlines -- those with extensive international routes -- have been diverting bigger planes -- and seating capacity -- from domestic service to international routes where -- they believe -- there is more money to be made per seat.

The Air Transport Association's monthly yield report bears that out. In April, major domestic airlines' yield (the money they made per seat sold) was down 2.9 percent from April 2006 on domestic flights, but up 7.2 percent on transatlantic flights and up 9 percent on Pacific flights.

So the major airlines are betting that trend continues, as competitive pressure from low-cost and regional carriers also works to keep domestic fares down. Maybe it does, and maybe an international fare war breaks out and the airline strategy, such as it is, collapses. At any rate, the major airlines are willfully leaving domestic passengers in the lurch.

As bigger planes go to Europe and Asia, that means many more small planes -- and increasing demands on air-traffic control and airport scheduling -- on many domestic routes. And all airplanes will be packed. In April, airlines in general already were flying with load factors -- the percentage of seats occupied by paying customers -- approaching and in some cases exceeding 85 percent. That means, on most flights, every seat is full.

Delays? Delays are reaching record levels already, and what's worse, fiascos where planes full of people sit stranded on ramps for six, eight and even 10 hours are becoming fairly routine.

In short, demand is strong, airports are at capacity, there is no slack in the system to accommodate more than the most minor bad weather, and the airlines have fired so much of their work forces that there's often nobody around to manage any of the great and lesser crises that are sure to be the hallmark of air travel this summer.

Major airlines had 262,400 workers in February 2007, according to the Department of Transportation. That's a 23.3 percent drop from February 2003. While low-cost and regional airlines have added workers, the overall domestic industry workforce was down 6.8 percent in Frbruary, compared with 2003.

And hub airports, where the network airlines with the most drastic cuts in employees dominate travel, are worried.

The Travel Industry Association of America said this week that domestic travel, including air travel, will be up 1.4 percent for leisure trips and 3 percent for business trips this summer.

In a system stretched so tight, it takes only small and quite predictable glitches -- thunderstorms in Dallas! -- to hobble air transportation. Mike Boyd, of the Boyd Group aviation consultant company, whose Monday morning essays are must reading likes to jokingly evoke the image of the Fall of Saigon (above), with desperate hordes lunging for any flight out, when he talks about airport chaos.

This summer it may actually start looking like that.


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