If my travel experience this week is any indication, the airlines are eagerly trading passenger misery for lower losses. And in the process, they're forcing passengers to take on some new and unexpected costs.
On Sunday, my family had been expecting to fly back home to Boston from Milwaukee. But Frontier Airlines, a division of Republic Airway Holdings (RJET), canceled our flight, cheerfully notifying us that we could catch another one five days later.
We decided that spending the next five days in Milwaukee for the mere chance of a flight home wasn't worth the risk. The trains were booked, and a bus was out of the question. So we rented a car and drove from Milwaukee to Toledo, Ohio, on Sunday; from Toledo to Albany, N.Y., on Monday; and finally from Albany to Boston on Tuesday morning.
Welcome to Pre-Canceled Flights
We were hardly alone. We were among thousands of victims who suffered from a new airline policy of canceling flights that might be at risk of being stranded in a snow zone.
As New York Times aviation reporter Matthew Wald told NPR, which we listened to on our long drive home, the airlines have taken up a new strategy called pre-cancellation. "You might call it drop-dead," said Wald. "And the theory is, yeah, New York is OK today, but if we fly in there, it's going to snow overnight. We won't get out again. We just won't go."
Due to pre-cancellation, what happened to us and thousands of others last weekend will happen to many future travelers who head in or out of snow zones.
Moreover, thanks to record load factors (how many seats are filled on flights) of 82%, the cancellations made for more demand than supply. There are 4.6 passengers for every seat, meaning it should take between four and five days to get everyone to their destinations, according to The New York Times.
This policy marks a clear trade-off between airline shareholders and passengers. For example, according to Guardian.uk, the airline industry forecasts that revenues will hit $522 billion in 2010 -- $42 billion below the 2008 peak and $43 billion above the 2009 low. Between 2000 and 2009, the industry lost $50 billion.
However, by spring of this year, estimated airline industry losses fell 50% from $5.6 billion to $2.8 billion, thanks to those rising load factors. And Wednesday, an aviation consultant told Bloomberg that he thought the industry would actually make a $3 billion profit in 2010.
No More Leather Seats
Frontier is a prime example of the change in the industry. The carrier has survived numerous mergers, including one with Midwest Express, which we flew every December for about a decade before it got bought in July 2009.
But Frontier parent Republic actually made a profit in third-quarter 2010. Shareholders got to enjoy the benefits of full planes in parts of the country where the weather was fine.
Meanwhile, our costs for the two-day drive halfway across the country -- including the rental car, hotels and meals -- were 66% higher than they would have been if our flight had actually left as scheduled, before the blizzard pounded Boston.