Shrinking airlines, shifting markets will frustrate U.S. air travelers

By Betty Stark

Most business travelers agree that 2007, a year overrun with crammed, sold-out and canceled flights was a challenging one for air travel. Passenger dissatisfaction rose to an all-time high as cries for an air travelers' rights bill "with teeth in it" escalated to a fever pitch.
You don't want to hear this, but here it is: As 2008 unfolds, it will probably get worse.

You might ask, "Haven't we suffered enough?"

Yes, absolutely, but there's little "we" can do about it. Here's why: a number of forces will converge in the months ahead, brewing up turbulence fueled by growing business globalization, shrinking domestic airline capacity, increased U.S. carrier access to European markets, and escalating fuel costs and airfares.

This Perfect Storm will occur in part because of a significant shrinking of Big Six domestic fleets.

American, Continental, Delta, Northwest, United and US Airways are cutting back on the number of seats in the air on U.S. domestic routes, citing escalating fuel costs and (this is perplexing) reduced demand.

United Airlines is leading the way, cutting back domestic seats-in-the-air by 8.4 percent. Delta has (so far) made the fewest reductions at 0.6 percent and the others fall somewhere in between. On average, domestic Big Six flights, including smaller regional jets (known in the industry as "RJ's"), will be reduced by just under 5 percent, which translates into tens of thousands of flights a day.

Smaller aircraft

Add to this a continual downsizing of aircraft from full-size jets to smaller RJ's, along with the possible end to service in some smaller markets, and it becomes apparent that the face of domestic travel is undergoing a major makeover.

What does this mean to business travelers? For every delay or cancellation caused by weather, mechanical snafus, cabin staff shortages, labor union skirmishes and whatever else, there will be fewer options for rebooking on other carriers (they won't have any spare seats either), and (this is where you enter the picture) there will be more stranded travelers.

You might wonder where those full-size jets are going. Could they be headed to moth-balled obscurity somewhere in the Mojave Desert? Or to more lucrative international markets where they will meet the growing demands of an ever-expanding flock of global travelers? If you selected Option B, you're right.

Enter the biggest piece of the 2008 air puzzle: The Big Six, looking to increase profit margins now that they're finally profitable, are scrambling to reposition themselves and their airplane seats for a major -- to the airline industry -- event that will take place on March 28, 2008.

'Open skies' accord

Here's what's happening. About a year ago, after more than four years of tumultuous negotiations, the European Union Transport Council ratified the United States-European Union "open skies" agreement, a historic event that is predicted to change the face of international air travel, opening global skies to competition and potentially pouring billions into airline coffers.

London's mega-port, Heathrow Airport, is in the spotlight. For years, exclusive air rights at Heathrow have been granted to just four carriers: British Airways, Virgin Atlantic, American Airlines and United Airlines.

With the launch of the open skies agreement, this major business and financial center and European cities beyond will be fair game for an airline able to secure coveted Heathrow landing slots.

Several U.S. carriers have announced plans to be among those tapping into the new markets. Delta and Air France have joined hands across the pond, giving Delta a few landing slots at Heathrow and opening options for Air France in Atlanta, Delta's U.S. home base. Continental Airlines has acquired slots at London Heathrow and will offer nonstop service from its hubs at Newark and Houston beginning March 29, 2008.

And of special interest to Madison and Milwaukee area travelers, Northwest Airlines in partnership with KLM Royal Dutch Airlines will launch three new daily nonstop flights to London Heathrow from Minneapolis, Detroit and Seattle.

According to Bill Bielefeld, national account executive for Northwest/KLM Airlines, the new routes will be served by the carrier's A330-300 fleet featuring World Business class service. Bielefeld anticipates that Northwest/KLM will also announce several new European routes in conjunction with the open skies agreement.

Times are changing

More travelers, fewer and smaller aircraft domestically, bigger and spiffier aircraft globally -- as stated by Bob Dylan's song,"The Times They Are A-Changin," you would be wise to change too. If your business travel is largely domestic, try to avoid last-minute travel whenever possible. And never travel without a Plan B.

Know alternate routes that will get you to or near your destination if your initial flight is canceled or seriously delayed.

If you're a global business traveler, familiarize yourself with the rush of new routes and carrier options to and throughout Europe, as well as to China, India, Russia, South America, and just about everywhere else in the world. Look for new carrier partnerships that will open new destinations, and re-evaluate your frequent flyer loyalties too. You might need to change affiliations to maximize benefits.

Will fares go up, will fares go down? Some say the increased competition will force fares down, but others point to climbing oil prices and the impact on airfares. Up or down, there will definitely be more options in international markets.

Charles Dickens wrote, "It was the best of times, it was the worst of times." Dickens was referring to the French Revolution, but the phrase might just as easily
apply to air travel with the launch of the open skies agreement. The ripple effect will be significant -- a revolution of a different sort. The prepared and savvy
traveler will definitely have the advantage.

Betty Stark is a Madison travel industry consultant and business travel writer with 25 years' experience.

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