Tuesday, July 01, 2008

It's only going to get worse, fellow travelers

If you were reading my blog about the time I was traveling to/from Jamaica, you'll know that I have thoroughly fallen out of love with flying - something which I used to have some perverse enjoyment of and viewed as 'part of' the vacation experience.

Unfortunately, it looks like things are only going to head from bad-to-worse. I read this article today in the Sacramento Business Journal:

The Incredible Shrinking Airlines
Joe Brancatelli - Portfolio.com
Airlines are getting smaller—fast—and that is going to have a profound and immediate effect on how you travel.

After guessing wrong on the direction of oil prices and generally reducing their hedging positions this year, the big airlines now face a world where jet fuel costs twice as much as it did a year ago. The major U.S. carriers have announced they will shrink by around 10 percent in 2008, and they will attempt to stem the red ink by slashing at their route networks and flight schedules. The longer oil stays above $100 a barrel—doesn't that sound like a blast from a much happier energy past?—the more the airlines will cut.That could mean some nasty surprises for travelers.

Here's what you need to know to help you understand the new airscape and plan for the coming weeks and months.

What You Don't Know...Some airlines have publicly trumpeted their cutbacks, all the better to underscore their parlous finances. But not everything is announced. Delta Air Lines, for example, is making sizable schedule reductions at its Atlanta, Salt Lake City, Los Angeles, and New York hubs. The carrier has been mum on details, however, because it wants to merge with Northwest Airlines and promised various government agencies that the combination wouldn't affect capacity. The lesson: Assume nothing. The flight you thought was there yesterday may not be on the schedule tomorrow.

Long and Short Are Most Vulnerable
You're at greatest risk of having a trip disrupted if it includes very long intercontinental flights or very short domestic commuter flights. The long hauls are going because they burn fuel simply to carry enough fuel to make the long runs. In fact, one European airline executive told me that his nonstop flights to the West Coast use about 30 percent more fuel per hour than his nonstops to the East Coast. So it's not surprising that Thai Airways is dropping its New York-Bangkok route (it stops at the end of the month) or Aer Lingus is cutting its Los Angeles-Dublin run (it ends in October). Meanwhile, the short commuter hops are going because the 37- and 50-seat regional jets aren't fuel-efficient either. It just doesn't make sense anymore to operate planes that carry so few passengers per flight.

Nonstops Are Being Stopped
Airlines are also eliminating routes that overfly their big hubs. One example: American Airlines has dropped most of its nonstop flights to Austin; most travelers now must connect through American's mega-complex in Dallas/Forth Worth. As airlines retreat, the larger hubs will fare better than the smaller ones. Last week, for example, Continental Airlines announced it would reduce flights at its Cleveland hub by 13 percent. The airline's much-larger connecting complex in Newark, New Jersey, however, is only losing 3 percent of its service. And the nation's most important hub, Chicago's O'Hare Airport, will see virtually no flight reductions. The federal government has capped the number of flights at O'Hare, and neither American nor United, the carriers that dominate the airport, want to risk losing any of their takeoff and landing slots.

Fewer Flights, Fewer Seats, Fewer Cities
Sharp-eyed travelers will notice three other startling trends: Fewer flights on once-popular routes, fewer seats on the remaining flights, and many cities disappearing from the route map. One example: US Airways announced last week that it would halve its operations at Las Vegas, from 141 daily departures to 74. As American Airlines contracts both its Miami and San Juan, Puerto Rico, hubs, the number of available seats between these Caribbean and Latin American flight centers is falling precipitously. This spring, American's seven daily flights offered a total of more than 1,700 seats. The fall schedule still shows seven flights, but smaller aircraft will be used, cutting the daily inventory to just 1,300 seats. Continental is dropping service to 15 cities entirely in September, dumping locales both mundane (Oakland, California, and Toledo, Ohio) and exotic (Bali, Indonesia, and Cali, Colombia).

Light Flights May Get Canned
As airlines obsess over oil—fuel now accounts for about 40 percent of a carrier's costs—a disreputable old practice called "flight consolidation" is returning. Despite what frequent flyers occasionally thought, network carriers in the past almost never canceled a scheduled flight because there were too few passengers; the airline needed the aircraft to get to its next destination to operate a subsequent flight. But with fuel costs what they are now, airlines may sometimes cancel a flight if too few passengers turn up at the gate. You'll probably be automatically re-booked on the airline's next flight. There's not much you can do if an airline abruptly cancels your flight; in fact, there's no way you can even be sure they "consolidated" your flight. All you can do is be prepared: Before you head off to the airport, get a list of other flights and connections that can get you where you need to go.

Panic Now, Book Later
If these cutbacks create a mild sensation of panic, it's understandable. But don't rush out to book flights now for trips six or eight months in the future. The airlines have raised published fares more than a dozen times this year and added a slew of new fees and restrictions. But many of the price increases are mitigated by the industry's reflexive, short-term discounting. You'd be better off waiting for the fuel-induced fare spikes to settle down. Besides, as it gets closer to departure, airlines will add discounts to help sell the remaining unsold seats. One more factor: Southwest Airlines, which is still profitable and still growing, hasn't even loaded its flight schedules and prices for travel beyond October 30. Southwest's competitors on its domestic routes will be forced to match whatever prices the new King of Skies eventually sets.

The Fine Print…American Airlines began charging most coach customers for checked bags on Sunday, June 15. United Airlines and US Airways have matched American's move to charge $15 for the first bag and $25 for the second, but their fees go into effect later in the summer.


And so the question is: Will this deter me from traveling? No. As much as I'd like to find a way to "stick it" to the airlines for making devoted travelers (and customers) like me pay for their poor business decisions, I don't see spending the rest of my life taking ridiculously expensive long weekends closer to home, as an option. BOOOORING.


e said...

Very useful information, thanks for sharing. I don't see this as a huge problem, though it will make trips potentially longer and more expensive, as long as we as travelers are armed with patience and information. I think too many flights is just as annoying, one flight delay acts as a domino effect, bags get lost in the rush, and if a major airport is shut down, the resulting delays across the country are just a nightmare. It'll all work itself out.

TravelVixen said...

Weeeeell, you say this but I'm hearing a lot of talk from people in the travel industry, saying that the very nature of travel as we know it is going to change.

I just finished reading a great book by a professional travel writer (Smile While You're Lying - I highly recommend it for a good laugh BTW) and the last chapter is devoted to predicting a pulling back in world travel for the average person. The thought is that the Golden Age of travel is over - the 'system' is broken. Airlines are unable to meet demand, keep fares low, AND remain profitable. Rising gas prices are not going backwards any time soon. Schedules to B- & C-level cities are being cut (and may disappear altogether) so unless you're in a major metropolitan area, you're stuck with fewer options, higher prices, and more connections. Soon, they say, the average Joe will be unable to afford to travel and worldwide gallavanting will once more be reserved for the rich with time on their hands and money to burn.

It's not just the book that's saying this - I'm reading it online, in newspapers, in magazines and seeing it in documentaries on the Travel Channel.

I don't know. I hope they're all wrong but I do see some major changes afoot. I just hope they make things easier for the average Joe (like moi) not harder. I'd hate to be relegated to local long weekends and nature walks in YellowStone. These things I'm saving for when I'm old and infirm.

e said...

Well, things working themselves out does not necessarily mean in our favor. I just meant that a new balance will be reached. And it may, unfortunately, be how you say, only the idle rich will travel. But no doubt, a large change is afoot. And if you haven't noticed (which I think you have), there is large change afoot in all things. Transformation, I would say. The next decade are going to transform the world in ways we cannot as yet imagine. Scary, but exciting.

TravelVixen said...

True. Interesting and thought-provoking observations.

I wonder just how much change and transformation will actually materialize in that time span. Often I have found out in life that the promise of change turns out to be a false hope. Which is not to say I am bitter, cynical, and pessimistic - far from it - only that change is usually most effective and long-lasting when it is incremental. Ten years seems such a short span of time. But then, a lot DOES NEED TO change.

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