Bleak Outlook For Improved Air Transportation System
Constraints on infrastructure capacity and other factors portend a bleak future for air travelers, with no relief in sight from poor service, according to CreditSights.
The core issue is that the Federal Aviation Authority has not increased domestic aviation infrastructure capacity, and will not be able to for years if not decades, CreditSights says. “In the meantime, the feds are now planning to restrict volume at key airports, supersize bumped passenger fines, and make stranding flights prohibitively expensive. The airlines will react by cancelling flights at the drop of a hat, stranding passengers everywhere but the runway at no cost. “
The airlines are not without fault either, CreditSights says. They jammed their hubs with regional jets. With larger jets moved to profitable international routes and marginal fleet expansion potential, airlines lack the ability to upgauge departures. The net result will be fewer flights and lower hub capacity, higher fares, and eventually a decreased probability of getting from A to B.”
Nobody is talking about improving customer service, just dumbing down the system so the airlines cannot screw up. More revenue for flat costs is good for the airlines, but is good for their customers only if they are the lowest common denominator.
Key predictions of the report:
- The FAA will be unable to increase industry infrastructure capacity for years if not decades, despite continuing demand increases.
- Resulting capacity saturation in the northeast leads to slot restrictions at JFK and EWR in addition to LGA and DCA. The results will be fewer flight options and higher fares.
- Restrictions at JFK could drive a Delta Airlines acquisition of Jetblue.
- Airlines have limited ability to upgauge existing flights due to their small combined orderbook, driving the gradual spread of capacity restrictions out from the east coast.
- There will be more stranded passengers in airports and less on runways as flight cancellations will become more frequent to avoid proposed penalties.
- Rebooking will become more difficult in the high load factor environment.
- Airlines will enjoy higher fares with reduced costs.
Blame for the current issues can be appointed all over the place, because no one is in charge, or has taken charge, of the industry, CreditSights says. “DOT and FAA oversight is weak; Congress is a problem, not a solution; the airlines compete to excess; and new airport construction or expansion is effectively impossible.”
The full report Airlines: Dumbing Down The Industry can be purchased here.
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