"Airlines might set passenger record this year"

Monday, November 15, 2004

Airlines might set passenger record this year
BY CHRIS WOODYARD 
USA TODAY


The U.S. airline industry, buoyed by the popularity of regional and discount
carriers, is poised in 2004 to set a record for the most passengers carried.

Until now, industry economists had expected passenger traffic this year to
be second to the pre-9/11 surge in 2000. But low fares, a diminished
terrorism threat, more international travel and a favorable forecast for the
holiday season have changed the consensus among industry trackers.

Yet the anticipated record would come amid deepening financial losses for
the industry.

John Heimlich, chief economist of the trade group Air Transport Association,
says soaring fuel costs and fierce fare competition will result in yearlong
losses for domestic airlines of up to $8 billion, or $2 billion more than he
had previously forecast. Major carriers lost a total of $23.2 billion from
2001 to 2003.

Barring an unforeseen calamity before Dec. 31, airlines this year will have
flown 685 million passengers, estimates economist David Swierenga of
consultants AeroEcon. That's 3 percent more than 2000; 6 percent more than
2003.

Behind the record loads:

. Low fares. Discounters such as Southwest and JetBlue have forced airfares
to the lowest average in decades. The low fares have lured more passengers
aboard. Bob Harrell, a consultant who tracks fares on high-volume routes,
says typical business fares are 7 percent lower than a year ago, and typical
leisure fares are 19 percent lower.

. Regional airlines. These smaller affiliates of the major airlines will see
growth in passenger numbers of up to 20 percent this year, says consultant
Doug Abbey, who follows passenger traffic for the Regional Airline
Association. Bigger planes and more routes are behind their growth.

American Eagle, for instance, is adding six 70-seat and three dozen 50-seat
jets this year. They replace smaller turboprops. Regional airlines are also
picking up more routes handed off by cost-cutting big-airline partners.

. Full planes. Passengers are filling more seats on the average flight.
Major airlines will likely eclipse their 2003 record of flying their planes
74.2 percent full on average, Swierenga says.

With more passengers, flight delays are creeping up. The latest Department
of Transportation report shows delays for the 12 months ended Sept. 30 were
the worst for any comparable period in three years.


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