“All-time best ever” was the catchphrase of the day in Airlines for America’s 2017 Review & Spring 2018 Air Travel Forecast teleconference.
A4A, the trade group representing most US major airlines, presented a litany of records from 2017: the lowest ever number of fatal accidents; best ever recorded performance for baggage handling (99.5%); the fewest involuntary denied boardings (3.4 per 100,000 passengers), and the lowest rate of customer complaints in five years (1.35 per 100,000 passengers).
John Heimlich, vice president and chief economist at A4A, said the airlines achieved these milestones despite facing a variety of notable challenges, including a nearly nonstop chain of disruptive weather and wild fires in every month of 2017; three back-to-back major hurricanes; under staffing at major air traffic control facilities, and power outages at three airports (San Jose, Sacramento and Atlanta) and two nationwide events that knocked out power at Sabre and US Customs & Border Protection.
In almost all the critical areas, technology played a vital role, Heimlich said.
“Technology helps to better forecast travel demand and no-shows, thereby reducing involuntary denied boardings. It supports improved operational reliability, fuel efficiency and aircraft health monitoring while paving the way for increased employee productivity.”
Customer service also benefits from new advances, he said, such as advanced systems that improve customer bag-handling performance through real-time tracking.
Even the weather is affected. Technology “enhances safety for travelers by better detecting turbulence, optimizing flight paths around weather,” Heimlich said.
The nut that remains to be cracked is profit margins, which have remained stubbornly low compared to other industries even in the best of years.
In 2017, the overall profit margin for US airlines, including ultra low-cost-carriers, was 11%, lagging behind Caterpillar (13.2%), Comcast (27.1%) and McDonald’s (37.6%).
Looking ahead, the big three airlines’ growth is at a virtual standstill, while ULCCs Spirit and Allegiant are nearing 300% growth.
Heimlich took a jab at the current campaign to convince the US Transportation Department to impose some regulations on airlines to preserve competition. There’s no need, he said: Traffic analysis shows more competitors on US city pairs, up from an average of 3.33 competitors on each route in 2000 to 3.53 last year, due largely to the expansion of LCCs and ULCCs.
Meanwhile, daily seats departing US airports in scheduled service are up 18% since 2010.
The improved financial situation has enabled airlines to invest more in the customer experience, Heimlich said. In 2017, airlines directly invested $20 billion in flight and ground equipment, facilities, IT and 450 new aircraft.
Heimlich said A4A projects that spring air travel will rise 4% this year, marking yet another all-time high.