Fewer flights and smaller aircraft leading to many more passengers per flight.
Airline travel today mostly stinks. It is thanks to higher costs, worse service, and truly uncomfortable in-flight conditions. But understanding why life in the air isn’t particularly good takes a little work. Actually, it takes a lot of work because the Department of Transportation’s new assessment of the airline industry runs a lugubrious 78 pages and is laden with enough charts, statistics, and graphs to make Battlefield Earth seem entertaining.
Lucky for you, however, they pay me to plow through 78-page government reports about airline travel. That’s good because the study actually offers genuine context about why our lives on the road stink. Five failing areas of air travel—cost, comfort, consistency, service, and convenience—come into sharp focus when you look at the stats that the government has compiled.
Why has air travel become so expensive?
In a word: energy. No matter what else airlines do to control costs, they’ve been overwhelmed by the price of jet fuel. In 2001, fuel was 10 percent of the airline industry’s operating costs. Today, energy consumes about 35 percent of their budgets, and “fuel is the largest single component of costs, exceeding payroll and fringe benefits.” The industry spent $31 billion on jet fuel in 2011, triple what it did in the year 2000. And, yes, it is worse for airlines than for us drivers. In the year 2000, the government estimates we paid $1.51 for a gallon of gasoline. Today, it’s $3.68, according to the AAA. By contrast, airlines paid 78 cents for a gallon of jet fuel in the year 2000, a record $2.88 last year, and it’s $3.16 now. In other words, the “price at the pump” has quadrupled for airlines while motorists are paying “only” 2.5 times more.
Why has air travel become so uncomfortable?
A triple whammy of closely related factors—fewer flights and smaller aircraft leading to many more passengers per flight—have led to uncomfortably close and cramped in-flight quarters. Airlines “have significantly cut back on available capacity by reducing the number of flights,” the government report states matter-of-factly. But the statistics are startling: The total number of domestic passenger flights declined by 13.9 percent between June 2007 and June 2012. In fact, the airline industry slashed service at 30 of the nation’s 35 largest airports. Airlines also shifted to smaller aircraft. Flights flown using medium-size jets (101 to 170 seats) fell by 12 percent, and flights operated using the largest, twin-aisle aircraft (251 to 400 seats) fell by 44 percent. What replaced bigger, more comfortable planes? Regional jets with just 71 to 100 seats. That category of flights has more than doubled. This let’s-get-small approach led load factors (the percentage of seats actually filled) to reach 82 percent in 2011, from 71 percent in 2000. And as the carriers rush to add more seats to coach cabins, the quality of our ride continues to deteriorate.
Why has airline travel become so inconsistent?
The famous airline names you know and think that you’re booking—American (OTC: AAMRQ), Delta (NYSE: DAL), United (NYSE: UAL), US Airways (NYSE: LCC)—may not actually be running the aircraft. In 2011, a cumulative 61 percent of the advertised flights for those four airlines were operated by code-sharing regional carriers. That’s up from just 40 percent in the year 2000. The biggest outsourcer? United Airlines, where 68 percent of flights were operated by other carriers in June 2012, doubled its code-share rate from 2000. Sixty-seven percent of US Airways’ flights were operated by others in June 2012, up from 49 percent in 2000. At Delta Air Lines, it’s 59 percent now versus 40 percent in 2000. At American Airlines, roughly half the flights are outsourced, up from 40 percent in 2000.
Why is airline service now so poor?
Service quality is a totally subjective measure, so statistical judgments are nearly impossible. But if you believe that a well-staffed workforce of fairly compensated employees is best equipped to offer good service, you can understand why the airline industry fails so frequently. Airline employment has plummeted since the year 2000, when the industry had a combined 668,000 full-time workers. Today that number is just 536,000, a decline of approximately 20 percent. In 2009, after a 9.6 percent year-over-year decline, the industry workforce was at its nadir with just 513,000 employees. Since 2008, only two passenger carriers have added jobs: Southwest Airlines (NYSE: LUV) added 3,500 positions, and JetBlue Airways (Nasdaq: JBLU) added 2,000 jobs. The government report does not cover airline-employee salaries, but all of the legacy airlines have been in Chapter 11 bankruptcy since then, and all demanded substantial salary and benefit concessions from passenger-facing employees. One survey says that some flight attendants now make as little as $18,000 a year.
Why is it so difficult to fly from place to place?
If you think it’s gotten harder to fly from here to there, you’re not imagining things. Quite apart from the added layers of annoyance created by the Transportation Security Administration, airlines simply don’t fly to as many places as they once did. According to the government report, the number of flights of less than 250 miles plunged 24 percent between June 2007 and June 2012. The number of flights between 250 and 499 miles fell 16 percent. In these short-haul markets, there are now a total 2.3 million fewer seats available. The airlines have also taken an ax to their smaller hubs. In the five years between June 2007 and June 2012, scheduled flights dropped 63 percent at Delta’s Cincinnati hub, 26 percent at United’s Cleveland hub, 35.5 percent at Delta’s Memphis hub, 40 percent at what was once US Airways’ Pittsburgh hub, and 25 percent at American’s former St. Louis hub. Even several larger cities have suffered. The number of flights at Chicago’s O’Hare Airport is down 13 percent, even though it is one of the few places where two large carriers (United and American) maintain hubs. Service in Philadelphia, US Airways’ primary international flight nexus, has dropped 13 percent.
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