Travel Forum / Travel Types / Air Travel / May 2008

Unhappy travelers cost airlines $9 billion in revenue

By Christopher Hinton, MarketWatch

Last update: 1:34 p.m. EDT May 29, 2008

Some air travelers prefer to stay home rather than suffer through flight
delays and cancellations, a loss of about $9 billion in potential revenue
for an industry desperate to offset the soaring cost of fuel, a new survey
showed Thursday.

In a survey of 1,003 travelers by the Travel Industry Association, more than
half said they were fed up with flight delays and blamed airlines for the
deteriorating state of U.S. air travel. They also prefer to stay home, or
take alternative transportation such as a bus, train or car.

"Many travelers believe their time is not respected and it is leading them
to avoid a significant number of trips," said Allan Rivlin, a partner at
Peter D. Hart Research Associates, which helped sponsor the survey.
"Inefficient security screening and flight cancellations and delays are air
travelers' top frustrations."

The TIA estimates that more than a quarter of U.S. air travelers cancel
about two trips a year to avoid dealing with security, delays and
cancellations. That translates into a loss of about 41 million passenger
tickets at an average roundtrip price of $700.

When lost revenue for hotels, restaurants and taxes are factored in, flight
delays are costing the U.S. economy about $26.5 billion, the survey showed.
'Many travelers believe their time is not respected and it is leading them
to avoid a significant number of trips.'

‹ Allan Rivlin, Peter D. Hart Research Associates

"With rising fuel prices already weighing heavily on American pocketbooks,
we need to find ways to encourage Americans to continue their business and
leisure travel," said Roger Dow, president and CEO of TIA. "Unfortunately,
just the opposite appears to be happening."

Of those polled, about 62% said they think air travel in the U.S. was
getting worse. About 70% of frequent flyers, or those taking at least three
trips a year, thought air travel was getting worse.

Getting tarred in all this are the airlines. Despite concerns of a U.S.
recession, Americans are still flying in record numbers, and domestic
passenger growth in February increased by almost 2%.

That means there are more planes in the air, causing congestion at major
hubs. Not helping is a growing business jet industry and an antiquated,
ground-based radar system that analysts say force aircraft to fly with large
buffer zones.

Airlines are also getting clobbered by skyrocketing jet fuel costs, and so
far airfare has not kept pace. To make up for it, network carriers are
finding new revenue sources by charging for checked baggage or premium
seats, or eliminating in-flight snacks.

Though carriers still aren't covering their fuel costs, many passengers see
the charges as petty, raising overall frustration with the industry.
However, the TIA survey also showed that travelers did think that airline
safety and security are improving.