Airline traffic in the domestic system has rebounded significantly this year from the depressed levels of spring 2003. Though passenger numbers at most U.S. airports have not yet reached peak levels observed in the gridlocked summer of 2000, the increase in systemwide traffic already is impacting business travelers, their managers, airport operators and the airlines.
The federal government now is enacting measures on the ground and in the skies to ease air traffic congestion and, thanks to new technologies that streamline airport processes, passenger wait times at checkin counters are not nightmarishly long, as they had been in 2000. Though lines at security checkpoints have been lengthy at certain airports during peak times—prohibitively long, in isolated cases—some industry observers said general concerns about passenger inconveniences have been exaggerated.
That does not mean travelers have not been faced with frustrations this summer at the nation's airports, or that such frustrations will fade with the arrival of autumn. Increasing traffic means more crowded planes, less likelihood of travelers arriving to their destinations on schedule and a greater likelihood of having baggage mishandled. It also could mean more difficulty in redeeming reward tickets and upgrades obtained through frequent flyer or airline business programs.
In the first half of 2004, major U.S. airlines increased traffic levels between 7 percent and 14 percent from 2003. "Traffic increases, of course, are a good thing for the airlines," said Robert Mann of R.W. Mann & Co., an airline industry consulting firm in Port Washington, N.Y. "There always will be a ton of demand at the right price."
The right price apparently is being set by the likes of AirTran, JetBlue and Southwest, which further lowered many of their fares and have been matched by most competitors on most routes
(BTN, July 19). Though travelers may experience difficulty in booking that lower-price seat on their flight of choice, airlines are adding capacity nearly as quickly as traffic is rising. Nevertheless, airline load factors are running higher than last year, and in some cases at record levels, so limited availability on certain flights should be expected.
Meanwhile, the International Air Transport Association said May 2004 traffic grew 38 percent across all international routes and just shy of 20 percent for the first five months of the year. IATA's comparison to the equivalent five months in 2000 showed an 8.8 percent increase in passenger traffic. "Traffic growth for the first five months of 2004 is testimony to the resilience of air transport," said IATA CEO and director general Giovanni Bisignani. "Not only have we fully recovered from the impact of SARS and war in Iraq, all major regions of the world are reporting traffic levels above those of 2000—the last normal year for our industry."
In general, an increase in passenger traffic can present problems for travelers attempting to redeem a frequent flyer reward ticket or attain an upgrade. Upgrades, in particular, have become scarce as airlines reduce premium cabin seating and fill elite frequent flyer program levels with more travelers
(BTN, June 7). Difficulty with redemption availability, however, may be overstated, according to Randy Petersen, editor of Inside Flyer magazine.
"A greater number of people are willing to pay more miles," he said. "We are finding that, other than business class, coach reward tickets generally are available, even in top city pairs. The firestorm around reward redemption is more emotional than anything else."
The situation at the nation's airports—though occasionally horrendous—also is not nearly as bad as it was in the summer of 2000, when an overburdened system left tens of thousands of travelers heavily delayed.
For starters, many more travelers now opt to use electronic tickets. With paperless nearly ubiquitous in the domestic market, travelers can check in online before leaving for the airport or make use of one of a rapidly growing number of self-service kiosks deployed by carriers at airports.
Meanwhile, queues at security checkpoints have moderated and, in most cases, subsided, at least for domestic flights. Though it still is not too difficult to compile horror stories from travelers, they appear to be exceptions rather than the rule.
"We have not seen any indications that one-hour security delays have returned," Petersen said. "The reaction has been overblown and [the Transportation Security Administration] has done an extraordinary job that it probably won't get credit for."
Beyond security checkpoints, however, things get dicey, at least from an operational perspective. With load factors running at or above record levels, involuntary denied boardings are on the rise. The industry total for the January-March 2004 time period was 1.07 per 10,000 passengers, up from 0.90 during the comparable time last year, according to the U.S. Department of Transportation. Alaska, Delta and Southwest bumped the most passengers, as a percentage of their totals.
High load factors also mean more crowded planes, forcing more business travelers into completely filled rows or, worse, the dreaded middle seat.
For many travelers, getting onboard and settling in doesn't mean victory. On the contrary, recent DOT numbers showed an across-the-board surge in late arrivals. Indeed, more crowded skies have translated into more delays and deteriorating on-time performance for nearly every major carrier and most of the nation's busiest airports.
United Airlines seems to typify the concurrent trends of increased traffic levels and worsening on-time performance. It reported first-half traffic growth of 13.4 percent—the largest of any major carrier—and said its June load factor of 86 percent was the highest monthly figure it ever has recorded. On-time performance in May, however, was 10.8 percentage points below April and 11.1 points below last May, in both cases marking the industry's steepest declines. Continental Airlines' on-time performance in May also nearly was 11 points below last year. Its first-half traffic increase was 12.9 percent, trailing only United among major carriers.
The industry as a whole had an on-time performance in May of 77.6 percent, down more than five points from April and more than seven points from last year. Severe weather was a factor in May, but the Bureau of Transportation Statistics reported an aggregate increase in delays for the first five months of the year. Late departures grew more than 3 percent, compared with one year earlier, to 15.4 percent. Late arrivals increased more than 4 percent to 19.3 percent of all domestic flights.
While mounting passenger levels is a primary factor, it is not the only one, according to SideStep consumer advocate Terry Trippler. "There will be air traffic control problems as long as the legacy airlines keep buying regional jets and insist on running hourly service on busy city pairs," Trippler said. "The RJs will backfire on them."
Indeed, major airlines increasingly are deploying regional jets on routes between their hubs and bigger spoke airports, and even between two hubs, rather than only to secondary and tertiary markets. That strategy increases flight operations at busier airports already facing air traffic control congestion.
Last month, the Federal Aviation Administration said nine of the nation's 35 largest airports were operating above Sept. 11, 2001, levels. By year-end, that number is expected to increase to 15, including seven of the 10 largest airports. FAA specifically cited five airports that immediately require additional capacity: Hartsfield Jackson Atlanta International, Newark Liberty International, New York LaGuardia, Chicago O'Hare International and Philadelphia International.
The Bureau of Transportation Statistics this month reported worse on-time performance in the first five months of the year for the vast majority of busy airports. Chicago O'Hare fell the furthest, nearly 16 percent, to finish the period with on-time performance below 63 percent. Only Charlotte and Cincinnati among the group managed to improve performance numbers.
Meanwhile, a recent Accenture survey of 429 business travelers found that 48 percent in the past six months experienced airline maintenance-related delays and/or cancellations.
The traveler headaches do not necessarily end when they finally reach their destination. The airlines as a group in May had a higher ratio of mishandled bags, 4.13 reports per 1,000 passengers, up from 3.65 a year earlier. Those majors with the largest increases included Alaska, American, Continental, Northwest and US Airways.
The airlines did improve in one DOT-measured customer service metric: passenger complaints. The industry's aggregate ratio in May was 0.54 complaints per 100,000 enplaned passengers, down from 0.70 one year ago. Three of the only four carriers with higher complaint ratios than last year were low-cost carriers: ATA, JetBlue and Southwest. The fourth was US Airways.
Corporate Negotiating ImpactSources had mixed opinions about the negotiating environment for corporations—influenced as always by their locations and traffic patterns—amid this period of rapidly growing volumes. One travel manager at a multinational firm said airlines recognize that traffic increases could be short-term and therefore won't play hardball. "Everyone knows that this all goes to hell in a hand basket if there is another act of terrorism," he said, speaking on the condition of anonymity. "Airlines are positioning themselves for the long term, realizing the situation is not back to normal, and won't gouge you."
Laurence Smith, an attorney with Wolff & Samson in West Orange, N.J., who advises corporate travel departments, agreed. "In recent requests for proposals for clients, we still see very aggressive pricing," he said. "It still is a buyer's market."
SideStep's Trippler offered an opposite viewpoint. "It is a seller's market, and it will be harder to get deals for corporate contracts because of record load factors, even with the increase in capacity," he said. "Legacy carriers do not have to beg for the business, and it has never been tougher for corporate travel managers."
"Two of our three main domestic airline vendors have renegotiated terms in the past 12 months or so, both of which worked to our financial disadvantage," said one Boston-area travel manager. "Increased price for decreased service can be a tough pill to swallow."
No matter the negotiating stance by their preferred airlines, travel managers still will hear about inconveniences from their travelers as long as airports and air traffic control routes fill with more flight operations. While some expect heavily discounted pricing to extend peak traffic levels past Labor Day, others were less concerned about the autumn, expecting the typical traffic fall-off. "This is July and August will be the same story, with load factors a few points higher," Mann predicted last month, "but come September, you won't have trouble finding seats."