Wednesday, June 04, 2008

Major airlines cut back service and seat capacity, causing sharp fare increases


USA Today this morning (June 4) runs a major story about huge service reductions planned by many domestic airlines as a result of the sharp escalation in oil prices this year. Particularly affected are smaller cities, smaller airports near large cities (like Oakland and Midway), and some vacation destinations, particularly Orlando and Las Vegas, which typically more low fares. Some cuts will be imposed in the fall. With less competition and fewer seats, airlines will be able to demand higher fares. Many red-eye night flights will be eliminated. The "purification" of air travel convenience and affordability will continue through the summer of 2009, the story maintains.

Vacation or personal travelers have often paid only a third or a fourth of what business travelers pay as they used excess capacity. The difference in business and personal fares could get much smaller.

Airlines are restoring Saturday night stayover requirements and increasing advance purchase requirements for lower fares, as well as adding fees for baggage and other sundries. Business travelers in the 90s used to buy back-to-back tickets to get around much higher mid week fares. Then Saturday night stayovers were cut out to eliminate the practice. Network news reports said that leisure travelers might pay 3 or 4 times as much as in the past. I checked DC and Baltimore to LAX in July and found the best fare about $470 a month in advance round trip for a week (USAIR). Southwest from Baltimore was similar (but the one way anytime fares are much higher than they were), a bit better still for seniors over 65.

The front page story Wednesday June 4 is by Marilyn Adams, Barbara De Lollis and Barbara Hansen. It is called “Fliers in for pain as airlines pack it in” and the link is here. The long story gives detailed analysis city by city. 100 communities will lose their air service by the end of 2008. The story was mentioned on the NBC Today show this morning.

NBC Today also reported that United Airlines today announced a reduction in capacity of 17%.

Peter Greenberg has a story on the Today Show section of MSNBC giving airfare and bus or train comparisons, which will work for people with destinations of less than 300 miles. The story is called "Can't fly? Have no fear, trains and buses are here!: TODAY Travel editor Peter Greenberg examines great alternatives to flying," link here.

Some news stories have recently suggested that a single coast-coast round trip by air would use about 10% of a person's annual "carbon footprint."

Science media stories say that airline fuel could be made from coal (for which domestic supply is ample), because the Air Force already has a well-developed program to develop jet fuel from coal. If we knew something like this, why did we wait for this and let it happen? A good high school student could write a science term paper on something like this and argue for it, but airline executives don't seem to get the job done. Science Daily has a good starting point on this from an article in March 2004, here, story title "Coal Source Of Jet Fuel For Next Generation Aircraft".

Personally, I found, in a day car trip yesterday in the Virginia Piedmont, that traffic seemed as heavy as ever. (I still make some of these "feline explorations.") Gasoline prices varied by as much as 20 cents even in small areas.

Second picture: simulated air traffic control monitor, Dulles Airport, Udvar-Hazy Smithsonian Center.

Update: June 11

Southwest Airlines entered into a fuel price insurance contract two years ago, and still gets jet fuel based on a $51 a barrel price. Therefore Southwest hasn't had to drive away cheaper passengers. It was not clear how long this contract lasts.

Of a $670 one way ticket from New York to LA, about $480 is set to be accounted for by the cost of jet fuel.

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