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Away on Business: Service cuts easing in airline industry

Study shows a three pecent increase in the number of flights in 2003
/ Source: Reuters

Cutbacks in both the number of U.S. airline flights and routes that occurred after the attacks of Sept. 11, 2001, may finally be easing, but so far improvement appears to be uneven.

Business travelers will likely find certain smaller cities still served by only one carrier, or in some cases, by none at all, according to a number of industry sources.

OAG, the schedule publisher that bills itself as the leading source of independent flight information, says its look at 2003 found a 3 percent increase in the number of domestic U.S. commercial flights over the course of the 12 months. That compared to a 2 percent increase during 2002.

The gain last year came despite the Iraq war and the SARS epidemic, both of which dented travel.

At the same time the OAG analysis shows not all markets improved equally. Chicago added 9 percent more flights and New York 5 percent, but Miami only added 2 percent and Los Angeles finished a half percentage point below where it was at the start of the year.

Phil Roberts, an analyst with Unisys R2A Transportation Management Consultants said there are now more seats generally available to medium and larger markets mainly because of new competition from low-cost carriers. The same doesn't seem to be true for smaller cities, he said,

One good sign, he added, is that some carriers are starting to take delivery of planes again or are placing new orders.

There has also been a fresh round of added service. Northwest said recently it was starting a daily route between Portland, Oregon, and Tokyo. JetBlue recently announced service between New York's John F. Kennedy International and Sacramento, California, beginning in March.

Mike Lynch, managing partner at eCLIPSE Advisors, a company that develops software solutions for travel procurement, believes there will be an increase of 5 percent to 7 percent in flights by major U.S. airlines this year.

But he sees only minimal secondary market re-entry "driven by low-fare airlines such as JetBlue. "Overall, I see 2004 as a continued recovery year. I think some airlines will make significant profits, some will make good profits, (and) some carriers will hope to break even," he said.

"That said, most of the mainline carriers' business models are still way too linked to an overall economic recovery, and the current recovery is, at best, fragile and very susceptible to an economic downturn," he added. "As such, I see risk, or anything perceived as risk, considered a dirty word."

"The one interesting trend to follow is how hard the mainline carriers will fight the low-fare airlines. Honestly, although they are better capitalized than at this time last year, I do not believe they are in a position to fight, much less win, a sustained battle with the Southwests of the world," Lynch concluded.