by Tom Isler and Hunter R. Slaton | October 01, 2008
U.S. airlines have begun to implement unprecedented cuts in domestic flight capacity to combat high fuel prices and general economic turmoil. According to data released by the Official Airline Guide, to which all airlines report schedule changes, there will be 235,000 fewer flights and 19.9 million fewer available seats during 2008’s fourth quarter vs. the same period in 2007. OAG estimates 9 percent of overall domestic capacity will be cut this quarter.

While experts believe leisure and small destinations, some of which could lose all commercial airline service, will be hit hardest, even the nation’s largest airports will feel the effects. Statistics from the Boyd Group, an aviation consulting firm in Evergreen, Colo., paint a grim picture of a shrinking industry:

• Nearly 1.5 million fewer seats will be departing from Chicago’s Midway and O’Hare airports during the fourth quarter, vs. the same period a year ago, a 10 percent capacity reduction.

• Los Angeles will see a drop of more than one million seats, or 13 percent of capacity.

• Approximately 770,000 (11 percent) fewer seats will fly out of Phoenix.

• Air service in both Cincinnati and Oakland, Calif., will be slashed by about one-fifth, or close to half a million seats each.

• In Las Vegas, 8,700 fewer seats per day will leave McCarran International Airport. (The Boyd Group’s numbers include only domestic flights.)

Furthermore, the OAG report shows 38 small airports, most of which flew fewer than 70 commercial seats per day in November 2007, will lose all scheduled commercial flights by next month.

The reason for these cuts: Airlines are spending $20 billion more on fuel this year than last, $44.4 billion more than in 2000, according to David Castelveter, vice president of communications for the Washington, D.C.-based Air Transport Association of America. In a forecast released in early September, the Geneva-based International Air Transport Association warned that North American airlines are set to lose $5 billion in 2008. There also is broad speculation that more air carriers will fail, precipitating a major restructuring of the airline industry.

According to an M&C Research survey of more than 250 planners conducted in June (see “Handling Airline Woes,” M&C, August), 84 percent of planners say airline capacity cuts either have altered, or are going to affect, their site-selection process.

“If that doesn’t constitute a crisis, I don’t know what might,” says Steven Hacker, president of the Dallas-based International Association of Exhibitions and Events, which has formed a task force to advise members on how to deal with the challenges of air transportation. “This industry is almost entirely dependent on a functioning, reasonably priced, safe, convenient air transportation system. That’s hardly how I would describe what’s going on now.”