General Lee
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Reuters
U.S. Air Travel Forecast to Grow in 2004
Thursday March 25, 6:08 pm ET
By John Crawley
WASHINGTON (Reuters) - Passenger traffic aboard struggling network U.S. airlines is expected to grow this year for the first time since 2000, according to government data released on Thursday.
The projection was included in the Federal Aviation Administration's annual industry forecast that estimated growth in 2004 of more than 4 percent to 686 million passengers, for all flights aboard U.S. carriers. This includes the biggest airlines and their regional affiliates as well as low-cost carriers.
The agency's economic and other industry financial experts also expect that by 2005, the number of passengers on flights aboard U.S. airlines will reach levels not seen since before the 2001 hijack attacks.
But Transportation Secretary Norman Mineta noted in a speech to aviation and government officials that the commercial industry remains in sharp transition, which was accelerated by the attacks on New York and Washington.
"The changes are very clear and very profound," Mineta said. "Consumers are driving the changes and that's healthy."
The primary shift has been the strong growth and popularity of low-cost carriers. These companies now command more than 25 percent of the market and have forced the biggest airlines, whose business has slid in the past three years, to overhaul their competitive strategies to remain viable.
The biggest airlines have turned over most of their short-haul services to their regional partners to save money. And others, like bankrupt United Airlines (OTC BB:UALAQ.OB - News) and Delta Air Lines (NYSE
AL - News), have created in-house low-fare units to compete head-to-head with discount carriers.
Just Wednesday, US Airways (NasdaqNM:UAIR - News) executive David Siegel said the surge of low-cost business, especially the entry of Southwest Airlines (NYSE:LUV - News) into Philadelphia, underscores the fragility of his airline.
"Southwest is coming to Philadelphia in May ... and they're coming for one reason: they're coming to kill us," Siegel told employees. US Airways emerged from bankruptcy a year ago next week and continues to struggle.
David Neelman, chief executive of surging low-cost carrier JetBlue Airways Corp. (NasdaqNM:JBLU - News), reacted cautiously to the government air travel projections.
"It all depends on the economy. If fares stay low people will travel," Neelman said. He added that JetBlue will continue to expand, but prudently.
Industry consultant Mike Boyd believes the FAA is over-optimistic in its forecast, saying his analysis shows growth of roughly 2.5 percent. He said capacity and other constraints limit growth in 2004, but expects the industry to be in better shape overall after shedding billions in costs and competing more keenly.
"We think the major carriers are going to be a lot healthier and more aggressive a year from now. That's if oil prices don't come over the transom too quickly," Boyd said.
I like Boyd's last statement......
Bye Bye---General Lee
U.S. Air Travel Forecast to Grow in 2004
Thursday March 25, 6:08 pm ET
By John Crawley
WASHINGTON (Reuters) - Passenger traffic aboard struggling network U.S. airlines is expected to grow this year for the first time since 2000, according to government data released on Thursday.
The projection was included in the Federal Aviation Administration's annual industry forecast that estimated growth in 2004 of more than 4 percent to 686 million passengers, for all flights aboard U.S. carriers. This includes the biggest airlines and their regional affiliates as well as low-cost carriers.
The agency's economic and other industry financial experts also expect that by 2005, the number of passengers on flights aboard U.S. airlines will reach levels not seen since before the 2001 hijack attacks.
But Transportation Secretary Norman Mineta noted in a speech to aviation and government officials that the commercial industry remains in sharp transition, which was accelerated by the attacks on New York and Washington.
"The changes are very clear and very profound," Mineta said. "Consumers are driving the changes and that's healthy."
The primary shift has been the strong growth and popularity of low-cost carriers. These companies now command more than 25 percent of the market and have forced the biggest airlines, whose business has slid in the past three years, to overhaul their competitive strategies to remain viable.
The biggest airlines have turned over most of their short-haul services to their regional partners to save money. And others, like bankrupt United Airlines (OTC BB:UALAQ.OB - News) and Delta Air Lines (NYSE
AL - News), have created in-house low-fare units to compete head-to-head with discount carriers.Just Wednesday, US Airways (NasdaqNM:UAIR - News) executive David Siegel said the surge of low-cost business, especially the entry of Southwest Airlines (NYSE:LUV - News) into Philadelphia, underscores the fragility of his airline.
"Southwest is coming to Philadelphia in May ... and they're coming for one reason: they're coming to kill us," Siegel told employees. US Airways emerged from bankruptcy a year ago next week and continues to struggle.
David Neelman, chief executive of surging low-cost carrier JetBlue Airways Corp. (NasdaqNM:JBLU - News), reacted cautiously to the government air travel projections.
"It all depends on the economy. If fares stay low people will travel," Neelman said. He added that JetBlue will continue to expand, but prudently.
Industry consultant Mike Boyd believes the FAA is over-optimistic in its forecast, saying his analysis shows growth of roughly 2.5 percent. He said capacity and other constraints limit growth in 2004, but expects the industry to be in better shape overall after shedding billions in costs and competing more keenly.
"We think the major carriers are going to be a lot healthier and more aggressive a year from now. That's if oil prices don't come over the transom too quickly," Boyd said.
I like Boyd's last statement......
Bye Bye---General Lee
