28
Jul
Good news for travelers: airlines are adding capacity again
Following more than a year of dismal economic news, recent numbers released by the International Air Transport Association (IATA) indicate that more business travelers are flying again. As a result, airlines are adding back some of the capacity that was removed during the 2008 oil price spike and the ensuing recession. In my current Business Traveler column on USA Today.com there is a chart of data from the Air Transport Association showing how the top U.S. airlines are growing again. Additionally 1,430 new aircraft will be delivered this year worldwide and only 500 of those airplanes are slated to replace existing aircraft, according to IATA. Finally, over the last few months another 200 mothballed airplanes were put back into service.
If the capacity expansion can outpace the increasing number of travelers it will be very good news for travelers in several ways. First, more seats will make it easier to purchase last minute tickets with fewer sold out flights and fewer bumped passengers. There will also be more frequency on many routes giving travelers greater choice of flight times and less waiting around time. Some airlines may restore service to destinations dropped during the oil price crisis and subsequent recession. If capacity outstrips demand there will be more empty seats on board making flying a more comfortable experience again. Finally, rising capacity will also keep air fares in check and possibly push airfares down again.
Of course everything can change in a minute if oil prices rise, the economic recovery sputters, or there is another man made or natural catastrophe. Anything could curtail this fragile recovery but at least for now airline capacity is moving in the right direction.
Airport Avenger said,
Fares will probably come down soon, but not necessarily because of rising capacity. Surcharges on summer flights in the U.S. will end next month, and the slow fall travel has already spawned airfare sales. U.S. airlines are not adding much capacity and in fact have made a point of saying in their recent earnings reports that they will go slow. Delta, for example, sees capacity growing 1 to 3 percent. Others are holding steady. Much of the capacity expansion is coming in Asia and the Middle East. U.S. airlines have good reason to tread cautiously. In the past they have added more seats and flights too quickly. Current passenger demand does not justify large increases in capacity for them. There may be slightly more passengers in the U.S. compared to last year’s dreadful levels, but demand has not returned to the pre-recession levels of 2007 and 2008. This goes for business travelers as well. Continental CEO Jeff Smisek said last week that his airline saw 20 percent fewer business fliers in June of this year than it did in June 2008.
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david said,
Airport Avenger:
Thanks for your very thoughtful post. You make some great points.
David
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