The skies ahead are not likely to be especially bright for the U.S. airline industry. With route cutbacks, bankruptcies, budget cuts, and layoffs the order of the day for many carriers, meeting planners and attendees should be prepared for potential air travel hassles in 2005.
The airlines have lost $6 billion this year and close to $30 billion over the past four years, according to the Air Transport Association, based in Washington, D.C. Rising fuel prices, pension problems, and heightened competition are major contributors to the industry's red ink this year. In the past few months, U.S. Airways and ATA have declared bankruptcy. Delta Air Lines and Independence Air may be next as they cut costs to stave off Chapter 11. United Airlines has been under bankruptcy protection since 2002.
In addition, many of the large carriers have slashed routes. By March, United will decrease domestic routes by 12 percent and increase international flights by 14 percent. Delta will eliminate Dallas — Fort Worth as a hub by January 31, and U.S. Airways scaled back flights in Pittsburgh, which was downgraded from a “hub” to a “focus city.” Last year, American Airlines shrank the size of its St. Louis hub.
For meeting planners and attendees, these developments bear monitoring, says Michael Payne, executive vice president, SmithBucklin Corp., Washington, D.C. “If you're the planner responsible for the meeting, whether it's a large citywide or a smaller event in a particular location, it behooves you to make sure that you're up to date on what the carrier service is in those locations,” he says. “It's something you don't take for granted any more.”
While some destinations may have seen carriers reduce routes to their city, other competitors may have filled the resulting void. Many places, particularly second-tier cities, are adding routes with airlines such as Song, JetBlue, and Southwest, so the lift is really specific to the location.
The rise of low-cost carriers, coupled with the financial troubles of both major and low-cost carriers, throws into doubt the wisdom of using preferred carriers for events, according to MaryAnne Bobrow, president, Bobrow and Associates, Citrus Heights, Calif., an independent meeting planning and association management firm. “The best airfares are had 60 to 90 days out, and with the popularity of the Internet, the importance of having an official airline declines, particularly since attendees coming from across the nation do so from different hubs,” she says. She lists the airlines that have lift in a meetings destination and lets attendees make their own decisions.
Route cutbacks will hurt national or international meetings more than regional, drive-in events because attendees may have fewer arrival/departure options, Bobrow believes. Selecting hub cities may be the best way to lessen the effect, she says. She thinks the airline industry woes could accelerate the trend toward regional meetings.
Meanwhile, airfares are heading upward. The American Express Global Forecast predicts that next year, domestic business fares will rise 3 percent and international fares 5 percent.
— Dave Kovaleski