More Angst for Airlines: Canceled Flights, Bankrupies
Air traveler angst was sure to continue Friday as American Airlines grounded hundreds more flights. The financial toll and loss of goodwill likely would grow as well, as the inspection-related mess spread further to other carriers and hurt an industry already bleeding cash thanks to high fuel costs.
Lawmakers were asking questions and some fed-up air travelers headed for trains. Others gave the airlines a pass, saying the companies were doing the best they could.
"If somebody's got a choice between being in a plane crash and being late, is there a choice?" Jane Bernard, a writer from New York who was delayed by at least three hours en route from LaGuardia Airport to Miami, said Thursday.
Mingo Valencia, a 60-year-old stuck at Hartsfield-Jackson Atlanta International Airport while heading home to Midland, Texas, wasn't so gracious.
"Poor management," he said bluntly.
Congress also weighed in Thursday. The Federal Aviation Administration official who ordered safety audits last month, Nicholas Sabatini, faced tough questions from a Senate subcommittee about the agency's lax oversight of airlines and his own accountability for recent breakdowns. The FAA noted that airlines had 18 months to check electrical wiring on MD-80 jets since an initial order was issued in September 2006.
American, a unit of Fort Worth, Texas-based AMR, canceled another 595 flights Friday, bringing this week's total to nearly 3,100 due to safety inspections of its MD-80s. The carrier said disruptions will continue through Saturday as it works to comply with the federal safety order.
Alaska Airlines, Midwest Airlines and Atlanta-based Delta Air Linesjoined the wave, each canceling a small number of flights on MD-80 aircraft Thursday.
At least 250,000 passengers have been affected by the American cancellations this week alone.
Other carriers like Continental Airlines, JetBlue Airways, AirTran Airwaysand Northwest Airlines said they passed the first round of FAA audits with a clean slate and did not expect extra maintenance work or flight delays. It was impossible to say whether that could change since the FAA is conducting another round of safety audits.
The cancellations come at a time of high fuel prices and mixed success among the major air carriers at getting domestic fare increases to stick. Several airlines also have filed for Chapter 11 bankruptcy protection, including the latest Frontier Airlines . The fact that airplanes are flying very full is making it difficult for airlines that cancel flights to find empty seats on other carriers to rebook their passengers.
"This disruption is severe," said Webster O'Brien, an industry expert with aviation consulting firm Simat, Helliesen & Eichner. "People are going to be unhappy. There isn't going to be an easy way to walk everybody out of it."
American CEO Gerard Arpey said Thursday that the cancellations will cost the airline "in the tens of millions of dollars." Analysts say the toll could easily be that, and perhaps much more.
Besides lost revenue from the canceled flights, American also was giving $500 travel vouchers to an unspecified number of inconvenienced passengers and putting some travelers up in hotels. There also could be transportation costs to and from hotels, extra overtime for employees and the long-term costs of losing goodwill among customers.
American spokeswoman Andrea Huguely said the cost probably wouldn't be known until Saturday night, when the carrier expects to have all its MD-80s back in service.
The cost to other airlines also was unclear, and the pain could continue, analysts said.
"Just given the level of scrutiny, it wouldn't surprise me if there were more cancellations and groundings at other airlines," said Standard & Poor's analyst Philip Baggaley.
He said the disruption was worse than some major storms that have affected large airline hubs.
"The costs are fairly substantial," Baggaley said. "Given that the cancellations have been spread among a number of carriers, this will make it harder for airlines to turn around and try to raise fares, particularly in the weakening economy. It does indeed come at a bad time."
Some travelers looked for other modes of transportation.
Amtrak has seen a spike in passengers since the flight cancellations began earlier in the week, especially in the Northeast, spokesman Cliff Cole said.
"Our ridership was heavy yesterday, is heavy today and is likely to be heavy tomorrow, based on our reservations," Cole said Thursday.
Greyhound Lines spokesman Eric Wesley said he was unsure whether demand had increased because many bus customers buy tickets at the last minute.