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A steady climb

FAA reports airline industry will grow, despite extenuating factors


Delays, high fuel prices, labor unrest -- none of it will stop the airline industry from growing, says the FAA

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WASHINGTON (CNN) -- The U.S. airline industry should experience its tenth consecutive year of growth in 2001 -- notwithstanding rising fuel prices, growing labor unrest, increasing flight delays and swelling stocks of customer complaints, federal regulators said last month.

But the generally positive forecast by the Federal Aviation Administration -- which also predicts modest growth for at least the next 12 years -- does come at a price to workers and officials in the air industry. And it could mean even darker days ahead for consumers, who are already reporting rocketing numbers of complaints and may face soaring prices soon as well.

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The FAA report says air traffic controllers will have to cope with 33.2 percent more air traffic by 2012 than they did in 2000, straining an already overburdened aviation system. Last year's report predicted a 27.4 percent increase in air traffic by 2011.

But these increases don't even touch on infrastructure issues related to the need for additional airport runways and facilities associated with a rise in traffic.

The annual national Airline Quality Ratings report released last week shows a higher percentage of passengers bumped, flights delayed and baggage mishandled in 2000 compared to the previous year.

"The airlines are their own worst enemy," said Dean Headly, one of two professors which used data collected by the Transportation Department to compile the study. "They promised to do a better job in 2000 and they didn't."

Growth hits every sector of industry

But experts don't expect the record number of complaints to prevent major increases in air traffic over the next several years.

The FAA report projects that the number of passengers flying each year on U.S. airlines will rise from 738 million in 2000 to 1.2 billion in 2012. FAA statisticians predict growth in every sector of the airline industry:

Over the next 12 years, major airlines should increase by 53.3 percent the number of passengers who board domestic flights.

Regional and commuter airlines are expected to grow by 93.2 percent. These airlines are replacing propeller planes with small jets, which can fly over harsh weather and are popular with passengers.

International traffic between the United States and the rest of the world is projected to increase 91.8 percent. (International passenger traffic on U.S.-based carriers, such as United and Delta, is forecast to increase 103.3 percent).

The number of Revenue Passenger Miles -- a key measure that gauges how much revenue a given passenger generates for airlines -- will grow by 3.9 percent this year. This figure is expected to slow to 3.6 percent next year, but then rise to 4.3 percent over the remainder of the forecast period, the report predicts.

The number of times passengers board planes -- a key measure of aviation activity that's also related to delays -- will grow 3.3 percent this year, then slow marginally next year before accelerating to 3.7 percent a year for the next decade, according to the forecast.

But the report notes several factors could threaten continued growth. A recession in either the world or the U.S. economy could cut into profits and use, as could labor problems at the airlines, higher labor costs and high fuel prices.

Plenty to complain about

Like air traffic, consumer complaints are up according to the Airline Quality Ratings report. The study's findings include:

The on-time arrival percentage of airlines declined from 76.1 percent in 1999 to 72.6 percent in 2000.

The 10 major airlines averaged 5.29 mishandled bags per 1,000 passengers in 2000, an increase over the 1999 rate of 5.08.

The rate of passengers involuntarily bumped from flights rose to 1.04 per 1,000 from 0.88 in 1999.

The Transportation Department noted a 20 percent increase in complaints over that same period.

One major issue is a lack of runway space for these planes to take off and land. Experts said the United States needs 15 more runways right now in order to cut back on delays.

"The challenge of airports in the coming years is to develop and grow airport runways, runway capacity and terminal capacity to meet the projected growth demand," said Jeffrey Hamiel of Airports Council International.

External factors could have impact

Airlines face many more immediate concerns, most notably labor unrest and rising fuel prices.

The U.S. airline industry has also been beset by labor problems, with threatened strikes by airline personnel at several major carriers.

Pilots at Comair, a partner of Delta that flies about half of the carrier's Delta Connection flights, have been on strike since March 26, while pilots at Delta and Delta Express could strike as soon as April 29.

Last week, flight attendants for United, the world's largest carrier, voted overwhelmingly to approve a strike. But the workers did not walk off the job, a move that company officials say would be illegal. United is also in heated talks with the union representing its 15,000 mechanics and 30,000 ramp workers.

Flight attendants at the nation's second largest airline, American Airlines (which recently took over TWA), have also authorized a strike, although no strike date has been set.

On Monday, Northwest Airlines and its mechanics' union reached a tentative labor agreement weeks after Bush intervened in contract talks, a move that averted a strike. The deal, which still must be approved by union members, would end a four-year labor dispute.

Fuel prices declined an average 1.5 percent a year from 1992 to 1999, contributing to airline profits. But it was a far different story last year, when fuel prices jumped 29.5 percent in fiscal 2000. If the trend continues, ticket prices would go up while airline profits would go down.