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Fewer Travelers Expected to Fly This Holiday Season

December 11, 2008 2:35 PM

Santa's sleigh may feel a little lonely in the sky this holiday season.

The Air Transport Association forecasts 43 million passengers will board a plane during the holidays. The 43 million expected to travel between Dec. 18, 2008 and Jan. 7, 2009 is a 9 percent decrease from the number of people who braved the airports during the same period last year.

The drop in passenger numbers coincides with a decline in available seats. (No, they aren't pulling seats from planes, they've just been flying fewer airplanes since the fall). That means airplanes will be full, or nearly full, for the holiday stretch. The busiest two days are expected to be Dec. 19 and Dec. 27, during which planes will be 90 percent full.

For those that do head to the airport over the holidays, remember to plan ahead. The ATA recommends that passengers pack gifts unwrapped, use automated check-in options, and arrive early at the airport. Most airlines allow you to sign up for automated messages that can be sent to your cell phone or blackberry in the event of a delay. Still, the big bugaboo for the holiday travel season is snow, which as we've seen in recent years can quickly ground the holiday cheer. The airlines say they're prepared, but you can't take off when a blizzard hits the runway.

Meantime, not surprisingly, the ATA cites the economy as the reason fewer people will be venturing out.

"The decline is driven primarily by an extremely fragile economy and falling global demand for travel," said ATA president Jim May in a press release.

Remember that word: Demand. It may be an important one for the airlines in 2009. That's in part because overall the number of passengers traveling in the U.S. has dropped for seven months in a row, according to new government statistics out today. Five million fewer passengers flew in September of 2008 than in the same month last year, according to the Bureau of Transportation Statistics. Looking forward, the ATA has also seen a drop-off in some advance bookings.

Another key word may be "volatility," if you read ATA chief economist John Heimlich's 2009 economic perspective.

"It is indeed the era of volatility – of demand for the industry's product and of the magnitude of its largest cost – fuel," Heimlich says. "How can a labor-intensive, capital-intensive industry conduct multi-year planning amid such economic, not to mention regulatory, uncertainty?"

So where do we go from here? I've wondered this year if airline CEOs went to sleep cursing the price of oil. It wreaked havoc on their industry, leading to fees for passengers, lost jobs for employees, and a trend among airlines to slash their schedules.

But it also did something else. It forced the airlines to make those tough cuts ahead of an economy that went into the tank this fall.

"Because of what we experienced over the summer with fuel prices, the carriers made some very substantial cuts in their operations," ATA's executive vice president and chief operating officer John Meenan said in a recent interview with ABC News.

"As a result they're better positioned today than certainly they would have been anytime previously," Meenan added.

Still, that doesn't mean the airlines think they are in the clear. Those schedule cuts we saw this year will likely be followed by more in 2009.

"All signs suggest that schedule cuts prompted by high fuel prices in 2008 will deepen in 2009 primarily due to the rapidly deteriorating economic environment," Heimlich said in today's statement.

There are already some tell-tale signs out there to back him up. Delta recently announced that it would continue capacity cuts started in 2008 into 2009 and would be make staffing cuts if necessary. Dallas-based Southwest Airlines announced a net reduction of 13 flights between May and June 2009. American Airlines has cut 6 percent of flights for the first part of 2009 (which includes cuts they made at the end of this year). On Tuesday, the carrier's CEO Gerard Arpey indicated that American may make further cuts depending on the economy and how it affects demand.

Arpey also told reporters that economic stimulus efforts under the new administration must include money aimed at revitalizing the nation's aviation infrastructure, something that many in the aviation community have been calling on for years. To be clear, Arpey was not asking for money to go directly to the airlines a la the auto industry.

It's not all gloom and doom. Some airlines are still adding flights in the midst of the overall cuts. For instance, this morning American Airlines announced a new daily flight from Dallas-Ft. Worth to Madrid, Spain. Prior to the economic crisis, international flights were seen as bread winners for airlines. Whether that continues in the current condition we'll have to see.

But as for those fees? We've said it before and we'll say it again: Fees are here to stay. They generate millions of dollars for the airlines -- revenue they are counting on for 2009. And airlines are coming up with new ways to generate them as well. For instance, United announced a program earlier this week at 14 airports that offers a separate security line for its elite passengers. It feeds into the same security checkpoints as everyone else, but the line to get to the checkpoint is usually much shorter. If you don't travel in the rarified air of an elite passenger, you can purchase a one-time pass starting at $25.

As better put by airline analyst David Field in a recent interview with ABC News, "Fees, like diamonds, are forever."

-ABC News' Matt Hosford

December 11, 2008 | Permalink | User Comments (3)

User Comments

Posted by: kat | Dec 11, 2008 3:26:44 PM

Posted by: Saga | Dec 12, 2008 1:08:06 AM

Posted by: hxskc | Dec 23, 2008 8:05:07 AM

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