Will Airlines ever see the good times of prior decades again


#1

Over the last 10 years, airlines have been cutting back flights, raising ticket prices and adding on baggage and other fees, cutting down on in-flight entertainment and meal service, plus airlines have either gone completely belly up, have merged with other airlines, or are close to bankruptcy.

I see a number of factors in this:

  • Policies after 9/11 have changed passengers’ flying habits. One might consider flying from Boston or Baltimore to New York City, for example, but in light of needing at least 1.5 hours just to go through security checkpoints, travelers might consider driving or taking the train instead.
  • Prices have been greatly affected by fuel costs and other overhead with operating an airline. Economic problems, especially in the last 3 years, have caused less vacation trips.
  • I’m observing many companies doing less in-person meetings in favor of “virtual meetings” thanks to the Internet and telecommunication technologies. I know one salesperson who, 10 years ago, had at least one flight every month to make pitches who now only might fly to a customer’s office every 6 months thanks to GotoMeeting and similar products.

Cincinnati, once a good sized Delta hub, now has greatly reduced service, as has Pittsburgh, Memphis, and Milwaukee. Non-hub airports like Buffalo, Providence, and Portland, OR once had pretty good coverage of non-stop destinations, which have all been cut down either entirely or in the form of using much smaller planes. In 1999, you saw more 757s flying out of Providence; today there is only the occasional 757 US Airways will use for a flight to Charlotte, and that’s only seasonal. American Airlines dropped out of Providence entirely in 2008. Providence even used to have some international service to the Azores and Caribbean locations, but today its sole regularly serviced international destination is to Toronto, and that’s on a tiny turboprop. Buffalo doesn’t have any passenger international service, even to nearby Canada. Passenger numbers have declined rapidly in Providence, from 5.7 million passengers in 2005 down to only 3.9 million in 2010.

Do you guys think this will be a trend that will continue? I imagine we won’t see any improvements to airline service until somehow fuel prices are reduced and the economy improves… but even then, while business still obviously need airline services, as do tourists, that need has been declining a bit thanks to technology improvements, especially in the teleconference department.


#2

You are right - passenger totals as a percentage of US population or GDP will continue to be stagnant or decline.

More efficient aircraft are the big thing that can reduce the impact of high fuel prices. Also, stability in fuel prices is just as important as price itself. If airlines can plan around and build a business model around fuel at a certain price point for a several year period, they can find ways to carry more passengers. However with the risks involved, they have incentive to be as small as possible.

Fuel costs in the 90’s were tremendously low.

With the low-fare war going on in Milwaukee, they actually have seen record passenger totals in the past few years. Perhaps you meant St. Louis.

Portland is also faring relatively well (probably have more routes than they did in the 90’s).

If by good times you’re also referring to things like free meals on domestic flights, no that’s probably never coming back. It cost airlines a ton of money and everybody complained about them (it was standard fodder for bad standup comedians), and most importantly, nobody chose the airline they flew based on the food. It’s gone forever.


#3

You’re right, my mistake.

I was thinking more about Portland’s role as an Asian gateway in the 90s. Didn’t they have regular service to Seoul, Hong Kong, and Taiwan? I could be wrong. I believe they only go to Tokyo now.

I guess one could add to that the fact that portable electronics like iPads and iPhones have given passengers the option to watch their own in-flight entertainment, plus some airlines are even starting to add wifi options at a premium.


#4

Portland mainly had flights to Asia because of range issues with the aircraft available. Newer aircraft like the 777 and A330-200 allowed nonstop service to interior US hubs from Asia with aircraft smaller than the 747. For example, Delta didn’t have an aircraft that could serve Atlanta-Tokyo nonstop, so they operated it through PDX. When they got the 777, they got that aircraft so the stop in PDX became unnecessary.


#5

actually delta DID have the aircraft to go non-stop to japan, the MD11. it also ran an MD11 nonstop to korea out of portland until they determined they “weren’t making enough money” on the route, so they pulled out. shortly thereafter the closed down the mini-hub they had there.

ticket prices are still low as are revenue margins. federal taxes, high fuel prices, burdensome regulation all taking their toll on the bottom line. every airline feels the pain especially with this administration. there is no one in this admin who has pushed for anything positive toward business. just look at the NLRB attempted ruling that are out of their jurisdiction, and the clean air nonsense, has all companies running scared. the EU is trying to install a cap and trade scheme on all airlines which means higher fares for passengers. and why? because their failed socialist models have failed and they need more cash schemes to keep themselves afloat!! don’t get me started. (oh. i already did!)

we have alot of complaines about airline service here in this country. go give Ryan Air over in the UK a try and see how you like the charges they come up with!! people don’t seem to realize that every pound extra we carry means more fuel used/needed. more fuel used means more cost. new airplanes are expensive and usually airlines expect to keep them for 20 years or so.

if fuel keeps going up, more airlines will pare their flying, as Delta just announced a day or so ago, a 2-3% reduction in flying. they have to do what they have to do to protect the bottom line.

nexgen nav, well thats a pipe dream to me. sound great but the old problem still remains, once you get them to their destination, where do you put them! so, do you build more airports/runways to fix this problem, but at the same time, you have airlines cutting back due to high fuel costs, and possibly of getting charged for carbon output (airline industry, 2% of the total) which means they may park even more airplanes, lack of financing meaning they can’t buy any more airplanes, and on and on and on!!! sounds rosey don’t it!


#6

In fact, Delta’s last scheduled MD-11 flight was from Tokyo to Atlanta on 1 January 2004.


#7

Just because it could fly it doesn’t mean it didn’t regularly take a weight restriction. Those get costly, especially on routes where cargo matters like to Asia.