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Wall St Analyst: Airlines Are Making it More Difficult to Fly!

Wall St Analyst: Airlines Are Making it More Difficult to Fly!

 
Old Sep 5, 02, 9:36 pm
  #1  
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Wall St Analyst: Airlines Are Making it More Difficult to Fly!

By Meredith Grossman Dubner

CHICAGO, Sept 5 (Reuters) - A year after hijacked jetliners destroyed the World Trade Center and damaged the Pentagon, U.S. airlines are still struggling with declining air traffic and are changing ticket policies to boost revenue.

Monthly data released by the airlines this week showed that overall traffic, as measured in revenue passenger miles, slipped at many airlines in August. Capacity, or the number of seats the airline makes available to passengers, was also lower at a number of air carriers last month -- a sign that airlines don't have enough people to fill their planes.

The load factor at most airlines, meanwhile, or the percentage of airplane seats filled, was near steady.

"Traffic is down because capacity is down. You can have full airplanes, but that begs the next question -- how good is the revenue?" Merrill Lynch analyst Michael Linenberg said. "The concern is that revenue hasn't been all that strong. We're in a weak revenue environment."

United Airlines, the No. 2 U.S. airline and a unit of UAL Corp.<UAL.N>, said on Thursday that passenger traffic fell almost 13 percent last month, while traffic at AMR Corp.'s <AMR.N> American Airlines, the nation's largest airline, dipped more than 9 percent.

US Airways Group <UAWGQ.PK>, which last month filed for Chapter 11 bankruptcy protection, said its traffic dropped more than 17 percent in August.

Shares of major U.S. airlines were sharply lower on Thursday, weighed down by a weak stock market, fears of an invasion of Iraq and continued revenue problems.

AMR fell more than 7 percent, UAL was down 8 percent and shares of Delta Air Lines<DAL.N>, the No. 3 U.S. air carrier, dropped more than 6 percent. The American Stock Exchange airline index <.XAL> closed 6 percent lower at 44.09.

"Unfortunately, most carriers are responding to the public's appetite for low fares by cutting capacity and making travel more difficult," JP Morgan analyst Jamie Baker said. "The discount carriers continue to satisfy the public's appetite for value by offering more seats for sale. Not coincidentally, many of these discounters are profitable."

TICKETING CHANGES

Weak demand has forced a number of troubled airlines to seek concessions from their workers as they race to trim costs to survive the industry downturn.

In addition, several carriers have attempted to counter the weak revenue trend by announcing draconian changes to their ticketing policies this week.

In a move similar to actions taken by American Airlines, Continental Airlines <CAL.N> and US Airways, Delta Air Lines on Thursday said nonrefundable tickets not used on their ticketed date could not be used for any purpose after the date of travel.

Delta also said it was raising fees for paper tickets to $20 from $10 and would charge $100 for passengers who wish to fly stand-by during certain peak times.

The carrier said the changes would allow it to continue offering certain low fares while rewarding customers who pay higher prices with added benefits and flexibility.

"They're going to look in every single corner. They're going to leave no stone unturned when it comes to finding pockets of revenue," Linenberg said of the airlines' new ticketing policies.But Baker said the ticket changes were not the most effective strategy for improving demand.

"Airlines are reducing supply and making it more difficult for the majority of their passengers to travel," Baker said. "So my concern is that over time passengers will increasingly gravitate toward the carriers that treat them well and provide consistent value, and thereby avoid other carriers whose gate agents are armed with the latest restrictions eager to pounce on the hapless traveler who happened to get caught in traffic."


09/05/02 16:53 ET

Copyright 2002 Reuters Limited
RobertS975 is offline  
Old Sep 5, 02, 10:40 pm
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by RobertS975:
Delta also said it was raising fees for paper tickets to $20 from $10 and would charge $100 for passengers who wish to fly stand-by during certain peak times.</font>
So if I try to standby for an earlier off-peak flight there's no fee?

I missed something in the rules.

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Old Sep 5, 02, 11:04 pm
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by fannin:
So if I try to standby for an earlier off-peak flight there's no fee?

I missed something in the rules.

</font>
There will be no charge on Delta Shuttle for standby travel on any unrestricted fare, or for standby travel from off-peak to off-peak flights on any fare type.

*Delta Shuttle peak flights operate between 6:00 a.m. and 9:30 a.m. and between 3:30 p.m. and 6:30 p.m. Monday through Friday, and between 2:30 p.m. and 9:30 p.m. on Sunday.

This info was copied from the Q&A Thread


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