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US air industry on road to recovery?
The announcement that ATA Airlines was expanding service and increasing flights led to speculation that the US airline industry was finally starting to recover.
But some reports said otherwise.
While passenger numbers and cargo shipments will grow this year, US carriers will remain mired in red ink for the immediate future at least, according to Air Transport Magazine’s January predictions.
“US network carriers will not be able to raise fares enough to cover their higher operating costs despite expectations of a slight capacity loss on domestic route,” said J. A. Donoghue, editorial director of the ATW MEDIA GROUP.
“Network carriers have made great progress in cutting costs, but the persistent high fuel costs keep profits just out of reach,” he added.
The news was better for airlines worldwide.
If there are no further outbreaks of disease, terrorism and disruptive storms, airlines worldwide should earn $1.5 billion this year.
Another prediction was that United Airlines should finally emerge in 2006 leaner and fitter after a nearly four-year period of Chapter 11.
But do not expect much from Delta or Northwest until late in the year at least.
“Both still have serious surgery to undertake,” the study said.
At ATA, the airline announced it would add service to four cities and increase flights to Hawaii after months of layoffs and gate closures. It marked the first time the bankrupt airline has added service since May of 2005.
“With this announcement, we return to one of the core strengths on which ATA was built — leisure travel –while growing in a market that has been historically successful for our company,” said chief executive John Denison in a statement.
Combined, the new flights represent an 11.5% increase in the airline’s daily departures.
ATA, founded in 1973, is expected to emerge from Chapter 11 bankruptcy at the end of next month.
Report by David Wilkening
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