Airlines to Fly Fewer, More Crowded Flights to Offset High Fuel Costs
July 27, 2009
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  • By Michael Martinez


    Get used to sitting elbow to elbow. It’s not just for the holidays anymore.

    In 2008, fliers can expect to see fewer flights and fewer seats as airlines cut costs and reduce growth to counteract rising fuel prices. In essence, peak flying season is becoming a year-round affair.

    “Anyone who’s been on a flight in the last year has noticed that an empty middle seat is a luxury now,” said Genevieve Shaw Brown, senior editor at “Planes were very full over Thanksgiving, and we’re probably going to see that again this month.”

    Experts say it’s likely to stay that way next year as some airlines reduce their fleets and cut back on seat capacity for domestic flights.

    United and Delta recently announced they will trim capacity by reducing the frequency of flights to certain U.S. destinations. Southwest Airlines said it will take delivery of fewer planes than expected next year; the discount carrier also revised its growth plans, saying its capacity will grow 4 percent to 5 percent – not the 8 percent growth initially predicted.

    The changes come despite record load factors that surpass even pre-2001 levels. According to the Bureau of Transportation Statistics, load factors – the percentage of occupied seats on a plane – have climbed every year since 2001 and currently are 80.6 percent.

    But the revenue brought in by fuller planes has been offset by higher fuel prices. Airlines already have increased fares seven times since September to try to keep up with fuel costs.

    High load factors, said Ray Neidl, an airline analyst with Calyon Securities, “have been more than offset domestically by fuel costs. Airlines have not been able to pass on the higher costs (to consumers) because of low-cost competition. They can do that better on international flights, and that’s why they’re cutting back on domestic capacity.”

    Carriers have already tried to increase revenue by charging for meals and extra legroom in coach, but those fees don’t do much to keep up with climbing fuel costs.

    Airlines aren’t eliminating routes, but fliers might see less frequency to some cities. United, for example, is reducing service from San Jose, San Francisco and Oakland to Los Angeles by one flight per day per airport. Delta is cutting back daily service between Oakland and Atlanta and between San Francisco and Cincinnati. American will trim one flight a week between Chicago and Minneapolis, but no new Bay Area cutbacks are planned.

    Those airlines can’t continue increasing fares on domestic flights because of competition from low-cost carriers – Southwest, JetBlue and new entry Virgin America – flying the same routes. International routes allow carriers to charge higher fares to make up for costlier fuel.

    “In most cases, there are more seats chasing the business that’s out there,” said Tim Smith, a spokesman for American.

    United and Delta already have said they will increase their international capacity by about 15 percent. At the same time, Delta is returning several leased planes because of cutbacks in U.S. routes.

    “We have no interest in growing domestically,” Jake Brace, United’s chief financial officer, told a group of investors and analysts recently.

    United and Delta will start flying new routes to China next year. American has announced routes to Barcelona, Milan and London-Stansted from New York’s JFK.

    So while Bay Area travelers might find it easier to get to Beijing next spring, locating an empty seat to hub cities like Atlanta or Chicago might be more difficult.

    “We’re kind of in a perennial peak season with travel,” said Chris McGinnis, a business travel consultant. “When airlines reduce the frequency of flights, your options become more limited. Business travelers have always relied on the fact that planes weren’t always full, so this makes it more difficult for them.”

    Even Southwest is feeling the pinch. The Dallas-based airline reported that average occupancy on its flights slipped from 71.8 percent in November 2006 to 69.3 percent last month, in a month-to-month comparison. To increase revenue, the airline last month introduced “Business Select,” giving fliers an option to board early, earn extra frequent-flier credit and get a free drink – all for a fee.

    “We’re still growing, but much more modestly than we had planned” because of fuel costs, spokeswoman Beth Harpin said. “While folks are tightening their budgets at home, we are as well.”

    For fliers, it means planes will continue to be crowded – and not just for the holidays.

    “No matter what the airlines do to trim capacity, it will translate into fewer options and fuller planes,” said Travelocity’s Shaw Brown. “And that can, and probably will, drive up prices.”

    Date: 2009-07-27