US Airlines improved health no prescription for passengers
A new study says the airline industry is poised for a positive year but the bad news is that it won’t do much good for consumers, says a report by a highly respected publisher of business intelligence research.
“While the industry turn-around is good for the airlines and carrier shareholders, consumers will still feel the turbulence when they fly,” said George Van Horn, senior analyst with IBISWorld.
His research firm says the industry gross product is expected to reverse a five-year declining trend to a positive one in 2007.
“The good news is that the erratic, and painful shrinkage of the domestic airline industry may be drawing to a close,” said Mr. Van Horn. He added:
“Over the past five years, the resultant industry shakeout and competition with new low-cost carriers such as Jet Blue, Air Tran, and Skybus, has produced an astounding 22 airline bankruptcy filings, including such major carriers as US Air (filed twice), United Airlines, Delta Airlines and Northwest Airlines, among others.”
But in another development, according to IBISWorld’s analysis of available data, even though passenger counts and industry revenues have been rising, other significant measures of industry health have been consistently negative.
During the same five year period, domestic passenger counts have expanded by nearly 20% yet available seat miles have only increased by 9.5%.
Reductions in national carrier capacity and the increasing deployment of smaller regional jets put most passengers in a squeeze. More crowded planes not only restrict leg room, it helps increase fares.
“The good news for domestic airline passengers will come slowly, yet many factors and conditions are positioned for improvement,” said Mr Ban Horn.
Even with additional restructuring of large carriers in the near term, regional and national carriers are moving towards a better balance and both will show capacity growth in the coming years, the study says.
The ramp up for new commercial airplanes may have started as recently as 2005 when orders jumped to 2,163 from only 642 aircrafts in 2004.
The Federal Aviation Authority (FAA) forecasts that the number of regional jets will continue to increase their share of the total fleet and will represent 19% of the domestic passenger fleet by 2011.
As older planes are retired and newer, more fuel efficient planes added, the favorable trends in industry fuel efficiency will likely continue, according to the report.
“Expanding fleets and a better mix of plane sizes may be of some benefit to the passenger experience, yet concerns over increasing airport congestion remain valid,” the study found.
Since funding airport expansion is not easy, and land is not always available, the private sector has been developing alternatives for consideration. Proposals from airplane manufacturers and cargo carriers both aim to increase runway capacity without laying more concrete.
Report by David Wilkening
David
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