Fatter airline profits, worse passenger delays

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January 7, 2014, 7:36 pm
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(NECN: Peter Howe, Boston) As JetBlue Airways Corp. began restoring a full schedule of outbound flights Tuesday night from Logan International Airport and John F. Kennedy International in New York, thousands of passengers were still fuming – not just that their flights got cancelled, or that JetBlue service to the two airports went grounded for 17 hours.

Rather, what seemed to be most outraging many passengers was that it was commonly taking JetBlue three, four, or five days or in some cases even a week to re-book them on new flights.

“The problems of all the people sitting at the airports now? They're complaining because they haven't gone anywhere yet. They're still sitting there,’’ Allen Michel, a Boston University management professor and aviation industry expert, said in an interview Tuesday afternoon.

One big reason: For the first 11 months of this year, according to company financial reports, JetBlue was operating flights on average 83.8 percent full. Closer to holiday periods like New Year’s Day and the end of the Christmas season, it can be common for JetBlue to be operating virtually all flights 95 percent or more full.

And while snow and harsh weather are clearly the immediate cause of cancelled flights and shutdowns, what turns them into multi-day ordeals of misery for passengers is how little slack there is in airline capacity to re-book a day’s worth of cancelled passengers, much less several flights’ worth.

Michel said it appeared JetBlue made the situation worse by bungling how it imposed cancellations over the weekend and Monday. “JetBlue, they closed down operations here in the northeast, but they didn't give passengers a lot of warning. So a lot of the passengers that were flying, they weren't really able to stay home. They showed up at the airport, they arrived at the airport -- and they're sitting there now waiting to go,’’ Michel said. In Boston and New York, that’s led to 48 hours of endless t-v coverage of stranded passengers describing sleeping in airports, begging in-laws and friends to let them stay for extra days, missing work, or being out hundreds or thousands of dollars for missed vacations or hotel or alternative travel arrangements.

JetBlue has plenty of company in flying very full, usually very profitable airplanes – helping turn an industry that was mired in back-to-back bankruptcies in the 2000s towards robust profitability in the past three years. In 2012, the last year for which there's a full year of data from the U.S. Bureau of Transportation Statistics, U.S. airlines averaged an 82.8 percent “load factors’’ -- the highest number since 1945, when civilian travel was still being sharply curtailed and rationed during the end of World War II. Reflecting a years-long trend of airlines restricting capacity, in 2012 U.S. airlines carried 0.8 percent more people – but with just 0.2 percent more miles’ worth of seats than a year earlier. That meant the average airline squeezed the equivalent of nearly one more paying passenger on every 150-seat jet, growing the passenger load from about 123 passengers to 124.

The downside: Any time there’s bad weather or cancelled flights, there are fewer and fewer empty seats to absorb and move grounded passengers. That’s a problem for every airline – Delta, United, Southwest, American – but a particular disaster for JetBlue when roughly 45 percent of its service is through just four airports – Boston’s Logan and Kennedy, LaGuardia, and Newark around New York – and those two cities are among the very hardest hit by winter storms.

“They all had problems” in the recent storm, Michel said, “but no one actually closed down like JetBlue did. Probably the reason for that is they had so many -- nearly 50 percent -- of their flights coming through the place exactly where that polar vortex was coming through.’’ And in Boston specifically, where JetBlue operates as many as 120 flights a day, having to rebook, say, 10,000 people on planes that are going out with in many cases just 5 or 10 seats to spare is what turns a one-day schedule wipeout into a week-long nightmare for passengers.

Tags: Boston, New England, New York, Peter Howe, Logan Airport, JetBlue, LaGuardia
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