Monday, April 19, 2010

Cost of Europe Shutdown to U.S. Carriers: $80 million and Counting

While European aviation officials brawl about whether the systemwide shutdown of airspace was an overreaction based on limited computer modeling techniques (see earlier posts), here's some data on the financial impact on domestic carriers:

The flight cancellations caused by the Iceland volcano eruptions will account for about $80 million in lost revenue to major U.S. airlines, including losses from secondary domestic passenger traffic generated directly by international flights, according to an analysis today by the Boyd Group.

"The financial hit for U.S. airlines goes well beyond the passengers lost on the trans-Atlantic," says Tim Sieber, the vice president of Boyd Group International, an aviation consulting and forecasting firm. "It extends into the domestic market as well, because international passengers also generate significant domestic enplanements."

On average, each international passenger journey generates approximately 1.4 additional domestic enplanements, he said. "Passengers to and from abroad don’t all remain in U.S. international gateway cities," he said. Many also fly onward (and back) within the U.S.

Boyd Group's analysis indicates that the European shutdown caused a loss of more than 73,000 domestic one-way passenger trips. In terms of actual passengers, U.S. carriers lost over 200,000 passengers during the first four days of the event alone.

International traffic has a growing importance in the domestic system. According to Boyd Group International's Airports' U.S. enplanement forecasts, over 27% of all US passenger enplanements will be directly or indirectly the result of international passenger demand by 2014. (An enplanement is defined as one passenger boarding one aircraft, whether on a nonstop or a connecting flight).


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