North American airline industry starting to fly high again but Euro crisis could bring it down

Airline traffic and airfares were reported to be rebounding from the great recession, new reports say, but the collapse of the Euro could stall that growth and lead to the worst industry performance since the crisis of 2008.

A collapse of the Euro could lead to a staggering loss of more than US$8 billion worldwide, with North American losses of $1.8 billion, predicted the International Air Transport Association (IATA).

“The biggest risk facing airline profitability over the next year is the economic turmoil that would result from a failure of governments to resolve the euro zone sovereign debt crisis,” said Tony Tyler, the association’s director general and chief executive, in a statement.

At the same time, the US’s airline industry continues to rebound from what has been called the “Great Recession” with reports showing airline traffic and airfares on the rise.

The average domestic airfare in the US rose to $370 in April, May and June.
That is up 8.5 percent from the same period in 2010, according to a report by the U.S. Bureau of Transportation Statistics.

During the recession, the average fare in the same three-month period dropped to a low of $302 in 2009, according to the AP.

Meanwhile, the nation's airlines also reported carrying 551.8 million domestic and international passengers in the first nine months of the year, for nearly a 2 percent increase from the same period in 2010, according to the Bureau of Transportation Statistics.

The total passenger numbers for the first nine months are the highest for that period since 2008, according to the bureau.

But other timely and pending issues associated with the airlines include baggage fees.

Passenger rights advocates are trying to convince the US congress to do something about the proliferation of fees.

“But the bottom line is that you will probably get no reprieve from the fees any time soon,” writes the LA Times.

A Louisiana senator has proposed legislation to allow airline passengers to check one bag for free on each flight. Democratic Sen. Mary Landrieu said the bill is meant to protect passengers from excessive fees.

The legislation would also guarantee that passengers can bring carry-on bags at no extra charge, and get access to water and bathrooms on flights.

“Passengers have been nickeled and dimed for far too long and something has to be done about it," she said in a statement.

Secretary of Homeland Security Janet Napolitano has urged airlines to let passengers check one bag for free to reduce the number of carry-on bags packed into the overhead bins. She said carry-on bags slow the screening process and increase the screening cost nationwide by $260 million a year.

Well over two-thirds of air travelers said that the growing volume of carry-on bags is one of their top frustrations in a recent survey by the US Travel Association.

The airline industry has expressed its opposition to the bill.

In still another issue, there has been a huge rise in unauthorized airline tickets in the past few months, says the Airline Reporting Corp (ARC).

The face value of the fraudulent tickets in 2011 is more than $1 million, with the largest single incident valued at more than $77,000, according to ARC.

In contrast, ARC reported only 18 such incidents of fraudulent ticket orders in 2010.

The company attributes the surge in fraudulent tickets to online scams targeting travel agents.

The scammers send emails to travel agents that appear to have been sent from the global distribution systems that provide travel agents the ability to book and issue airline tickets, according to ARC. The agents who open the email are directed to log in to a fraudulent website and type in their credentials to order tickets.

By David Wilkening