Airlines Face Growing Pains
Occasional long lines at airports and crowded planes are causing glitches as the heavy summer travel season takes off, but the airline industry is viewing this year's problems as manageable.
Loads, or occupancy levels, of about 81% are only slightly ahead of the past two years, said US Airways (LCC) Chief Executive Doug Parker, in an interview. "With higher load factors, service disruptions are harder to accommodate," Parker says. "That just makes it more important to run a good airline."
Clearly, this is not the summer of 2000, which marked the low point in the aviation system's ability to handle its passengers. Six years ago, timeliness was a problem because of a series of summer storms, the federal government's decision to allow more flights at New York's already congested LaGuardia Airport and pilots at UAL's (UAUA) United Airlines, then the world's largest carrier, refusing to fly overtime.
That June, only 66% of flights arrived on time. For the full year, only 72.6% met their scheduled arrival time, according to the Bureau of Transportation Statistics. By contrast, 77% of flights were on time in 2005, and the pace was about the same through April of this year.The average airplane had 80.7% of its seats filled in May, according to the Air Transport Association. The average load last year was 77.6%, the highest annual average since World War II. Loads have been climbing steadily since the 1980s, when they never exceeded 63%. Even in the 1990s, they never exceeded 71%. "It isn't ideal from a traveler's point of view, but I don't see any problem running through a summer peak with loads in the mid-80s," says consultant Dan Kasper of LECG in Cambridge, Mass. "Airlines have done a pretty decent job of adapting to high load factors."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV