Airfares continue spiraling downward
Advertiser News Services
Airfares at major U.S. carriers fell for the 12th straight month in February as the recession and terrorist attacks forced carriers to slash prices to win back travelers.
The average one-way domestic fare fell 14 percent to $128.93 from $149.20 in February 2001, said the Air Transport Association. The group represents major carriers including AMR Corp.'s American Airlines, UAL Corp.'s United Airlines and Delta Air Lines Inc.
"While demand is increasing, it is driven by dramatic price cuts," Delta Chairman Leo Mullin said last week. "As a result the industry's rebound in revenue is lagging significantly behind the return in passenger demand."
The largest U.S. airlines lost about $8 billion last year as carriers cut capacity and more than 90,000 jobs after the Sept. 11 attacks. Airline traffic, while higher than the post-Sept. 11 lows, was down 11 percent for the first two months of the year from the year-earlier period, the association said.
And offering little relief to the nation's airlines, the Federal Aviation Administration said last week that passenger traffic will continue to fall this year.
Airline passenger traffic, which fell 7.2 percent in 2001, will fall another 6 percent this year before rebounding in the second half of 2003, the FAA said in announcing its commercial aviation forecast.
Indeed, passenger traffic won't return to normal levels until 2004, the agency said, a prediction that could be problematic for financially distressed carriers that need traffic to return to normal sooner rather than later.
The agency, which said air travel peaked at 695.3 million passengers in the 12 months ended Sept. 30, 2000, said it expected air travel to drop to 600.3 million passengers in the fiscal year ending this September.
The FAA now estimates the number of domestic passengers won't reach 1 billion until 2013, three years later than it estimated only a year ago.
American Airlines, the world's largest carrier, said it can't estimate when its traffic will return to normal.
"We're not been making any predictions because it is impossible for us to predict when the economy will totally recover or when the industry capacity will return," said Mary Frances Fagan, a spokeswoman for the Fort Worth-based airline. "But we will survive."
Bolstering its argument, the FAA said some of the nation's airports — such as LaGuardia Airport in New York and Los Angeles International Airport — have seen the number of airline flights drop by more than 20 percent.
Flights at Denver International, United Airlines' second-largest hub, are down 12.9 percent, while flights at Dallas-Fort Worth International, American's largest hub, are down 13.4 percent.
Even at O'Hare International Airport, the nation's busiest airport, commercial flights are down 6.7 percent. Nationwide, the FAA said that since October 2001, commercial flights are down 11.3 percent at the 31 largest airports.
About the only bright spot in the forecast is the FAA's estimates about regional airline traffic. The FAA says the number of passengers boarding regional flights should grow 8.2 percent this year and 7.3 percent in 2003.
Over the next decade, the FAA says it expects the number of regional jet aircraft, planes with less than 70 seats, to quadruple to 2,900 from the current 696.
