MONEY CULTURE
Daniel Gross
Silver Linings in the Sky
How a recession will improve air travel.
As I sat on a plane last year, covering my ears to block out the cacophony of a half-dozen deal jockeys barking into their cell phones and even more screaming children—as well as pounding my seat tray in rage as the captain informed us that our plane, parked on a LaGuardia runway, was 22nd for takeoff—a fellow passenger began singing the praises of a passengers' bill of rights. That sure sounded nice, I responded. But the only thing that will really improve the experience of flying in America is a recession. Let me explain.
Despite all the obstacles—foolish security measures, rising delays, fuel surcharges and airlines that made passengers pay for everything but oxygen—air travel grew steadily during the just-concluded economic expansion. As years of sustained prosperity caused the system to burst at its seams, policy wonks tried to craft incentives that would encourage airlines to stop cramming so many flights into the overtaxed aviation infrastructure. In recent months, the insanely high price of jet fuel ($3.22 per gallon last week), the credit crunch and the slowing economy have done what regulators and politicians were unable to do: persuade airlines to give up valued landing slots.
When the economy goes south, as it is doing now, the green-eyeshade types reassert themselves. In corporate America, business trips are among the first budget items to get slashed. (I'm guessing the number of people flying to subprime-mortgage-broker conventions is waaay down this year.) Among consumers, travel (especially to visit in-laws) frequently leads the list of discretionary items sacrificed on the altar of frugality. Hundreds of Bear Stearns bankers surely downgraded spring-break plans from a beach week at Atlantis to a weekend at Grandma's.
In the fall of 2001, the last time the economy slumped—a state of affairs aggravated by the events of 9/11—the number of monthly aircraft departures plummeted about 15 percent from the prior year's totals. That's not likely to happen this time around. The most recent data are from January, when the slowdown was just beginning. (Is it really a surprise that government reports on flight delays are delayed?) That month, the Bureau of Transportation Statistics reported, U.S. carriers operated 1.5 percent fewer flights than they had in January 2007.
January marked the third straight month of year-over-year declines in commercial flights. The trend has since accelerated as many airlines have involuntarily reduced capacity. In the past month, Aloha Airlines and ATA both filed for bankruptcy and ceased operations. When it went bust last week, discount airline Skybus knocked 74 more daily flights out of the system.
The failure of these marginal airlines removed only a marginal amount of flights. But larger, still-solvent airlines are following suit. US Airways has KO'd 30 percent of the overnight flights that had turned Las Vegas into a hot after-hours hub. Delta and Northwest have said they plan to cut capacity by 10 and 5 percent, respectively, later this year. And should the two airlines resume merger talks, the parking lots for jets in the Arizona desert could be expanding.
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Member Comments
Posted By: propjet72 @ 04/12/2008 10:45:18 PM
Comment: In his article, Mr. Gross is describing a delayed flight out of LaGuardia Airport, and how unpleasant the whole experience had been. As his crowded airplane is number 22 waiting for take off and he has to endure the annoyances of other passengers, Mr. Gross is hoping that a US economic recession will reduce air travel, congestion problems, and eventually benefit travelers. In his analysis, Mr. Gross states that some of the airline industry problems lie with the ???foolish security measures,??? the excessive ???fuel surcharge???, airlines cramming flights, business aircraft congesting the skies, and he even goes further to say that American Airlines, because of congestion, may have voluntarily canceled 2000 flights so they could free up gate spots. Mr. Gross argues that recession is actually a good thing, it will reduce the amount of passengers and in turn reduce the amount of flights, decreasing air traffic so travelers can enjoy a more pleasant flight.
Posted By: propjet72 @ 04/12/2008 10:44:26 PM
Comment: Personally, I do not think that using LaGuardia Airport as an example is fair. It is one of the most congested airports as it is geographically and physically challenged. We cannot associate it as a reference for airport congestion around the country. If the author had driven to Islip or Newark, I doubt he would have waited as long on the tarmac. It is true that economic recession will reduce flying and improve congestion; however airlines, as businesses, have to remain profitable and must look for savings by reducing the frequency of flights, increasing fares, and adding a surcharge for fuel, baggage and amenities. If the frequency of flights is reduced, so capacity, in turn it will increase load factors. The recession will also increase bankruptcies amongst carriers and reduce competition. It is going to be very difficult in this type of environment for travelers to find affordable flying. It is true that security measures such as airport screening needs improvement, but I will stop short as to call them foolish. The author probably already forgot that the demise of the airline industry after the September 11, 2001 terrorist attacks were due to lapses in airport security. It would be disastrous to disregard security in order to improve congestion. New technologies and efficient procedures should be the solution to the problem. Since deregulation, airlines as businesses are free to add and remove flights as they wish. They will cram flights if it is profitable and remove some if they are losing money. The main reason traffic has dropped has to do with constant rising fuel prices; airlines are dropping routes that are unprofitable at current fuel prices. The fuel cost has to be passed on to passengers who in turn have fewer choices and have to pay more for travel.
In addition, Mr. Gross is blaming airline congestion on general aviation and business jets, arguing that they are taking away precious slots and airspace from commercial airliners. As an experienced airline pilot, I can state that business aircraft have actually very little impact on airline congestion. Business aircraft usually do not utilize airlines hubs or major airports, this is the reason they fly to/from Teterboro or PDK. They do not usually fly on the same major routes that airlines use, and sometimes fly at much higher altitude than airliners, for example, a Gulfstream cruises at 51000 ft. while an airliner usually tops at 37000 ft. Blaming the private jet market for airline delays is totally baseless and reflects a lack of knowledge on how our air traffic control system operates.
Posted By: propjet72 @ 04/12/2008 10:42:40 PM
Comment: American Airlines, under pressure from the FAA and concerned about safety, decided to cancel 2000 flights this past week so they could inspect their fleet of MD 80s. Again, insinuating that that they would have purposely cancelled flights to free up gate slots is totally irrelevant and baseless. American Airlines, as a result, had to absorb a tremendous financial loss and disruption for their travelers and operations. We can only wish that they remain in business so they can still offer affordable travel.
When Mr. Gross states: ???With fewer planes in the air, and fewer passengers pushing their shoes through security machines, the flying experience should theoretically be improving??? He is, absolutely right, travel will improve, however in a recession, it will improve only for the people who will still be able to afford to fly. Maybe we will see a return of the old glamorous days when travel was reserved exclusively for the rich and famous. I personally do not wish and do not believe, like the author, that a recession will solve the problems that plague air travel. Instead our government, airlines and passengers, need to all work together to find solutions that increase the efficiency, economy and viability of our air travel system. New research and technology such as ADSB (Automatic Dependent Surveillance-Broadcast) and free flights for air traffic control, smart recognition system for security screening, new fuel alternatives to fossil fuel that reduce dependency, and systems that feed live information to passengers are all solutions that need to be implemented. In such a complex and fluid system that is air travel; there will always be someone who will complain that their flight was too late, too long, too hot, too uncomfortable or too expensive. I wonder what passengers would say if they had to cross the country by train or by bus. Air travel has accomplished tremendous leaps in the past 50 years; let???s just hope that it continues to do so.