Harvey may hit airlines hard
United is expected to take the biggest hit from delayed and canceled flights.
United, which uses Houston as a major hub, may be the carrier hit hardest by the storm.
Hurricane Harvey’s flooding and high winds forced the cancellation and delay of more than 23,000 flights and closed George Bush Intercontinental Airport in Houston for nearly a week.
The financial hit to the U.S. airline industry won’t be known for a while, but a preliminary estimate suggests United, Southwest and Spirit airlines will bear the brunt of the blow.
Although United Airlines is based in Chicago, the Houston airport is a major hub for the carrier; United has canceled about 20% of its flights out of George Bush Intercontinental Airport for the third quarter of the year.
Spirit Airlines has canceled about 9% of its flights from the airport this quarter, while Southwest Airlines canceled about 8% of its flights out of nearby William P. Hobby Airport for the period.
Both airports, which closed last weekend, reopened with limited service Wednesday.
After studying the effect of previous storms and hurricanes, such as Katrina, Ike and Sandy, Cowen & Co. analyst Helane Becker estimated that United could lose $266 million because of Harvey, while Southwest could lose $77 million and Spirit will be out $11 million. The financial toll on Spirit is lower primarily because that airline flies fewer passengers per plane at an average lower fare than Southwest.
In a report to clients, Becker said it is unlikely that the airlines will recoup the lost revenue from people in the region because it is “difficult to go on vacation after your house was flooded or the roof torn off.”
Still, investors don’t seem overly worried about the financial hit to the industry, with the Dow Jones U.S. airline index ending the week little changed from where it started.
Airline may expand its no-frills fares
Some low-cost foreign carriers are offering fares to Europe that sound too good to be true.
Norwegian Air Shuttle is advertising one-way tickets as low as $89, while Reykjavik-based Wow Air has flights starting at $69. For the most part, such fares are for bare-bones tickets and are limited to certain offpeak days. Checked bags, food and other essentials will cost extra.
Still, such offers have forced at least one U.S. airline to consider matching the foreign carriers.
Don Casey, senior vice president for revenue management at American Airlines, told an audience at an aviation summit this week that American Airlines is considering offering a bare-bones, no-frills ticket on certain international flights.
American Airlines, like several of its rivals, added so-called “basic economy” tickets this year on many domestic flights. The low-cost ticket gets you an economy seat, but almost all other services, including seat selection, checked bags and food, cost extra.
Basic economy passengers even have to pay an extra fee to bring a carry-on bag that goes into the overhead compartment.
Casey did not use the term “basic economy” when he talked about the new international seats. Instead, he used the industry term “unbundled,” which refers to a ticket for a seat, without any extras such as checked bags, snacks, drinks or entertainment.
American Airlines officials said the carrier may add the new cheap seats next year.
American Airlines already has added basic economy seats on several routes between the U.S. and Canada, Mexico and the Caribbean.
Airport plan for nonf liers criticized
The Pittsburgh International Airport is about to become the nation’s first airport to allow nonfliers through the security checkpoints to shop and dine within the terminals.
But American Airlines flight attendants think the new program, set to start Tuesday, is a bad idea that will make it easier for terrorists to get access to the airport and will frustrate travelers with longer screening lines.
“Beyond security concerns, having shoppers clog already frustratingly long TSA security lines will lead to flight delays and more passengers missing flights, especially during the busy holiday season,” said Bob Ross, national president for the Assn. of Professional Flight Attendants, which represents the American Airlines workers.
TSA officials say everyone entering the airport will undergo the same screening procedure, but travelers will get priority. If the lines get too long, airport officials will stop allowing nonfliers into the screening lines, TSA officials said.
Pittsburgh airport officials say the new program should not create a jamup at screening checkpoints because nonfliers will be allowed in during the nonpeak hours of 9 a.m. to 5 p.m., Monday through Friday.
Also, nonfliers have been allowed into the airport during the holiday shopping season over the last three years with no problems, said Bob Kerlik, a spokesman for the airport.
“We don’t envision an impact to the wait times at all,” Kerlik said.
There are no plans yet to expand the program to other airports, but the flight attendants union worries that other major airports, looking to boost tax revenue and sales, could be tempted to adopt a similar plan.
The Tom Bradley International Terminal at Los Angeles International Airport underwent a $1.9-billion makeover in 2013 that included more than 60 new shops and eateries. LAX officials said they have not discussed plans to adopt a program to allow nonfliers past the screening checkpoints.