Passengers Hold Tight as Airline Industry Looks to the Future

The future of aviation looks dire.

For many 2010 travelers a typical air-bound trip includes snaking security lines, sundry fees, steadily increasing ticket prices, and a burdensome skepticism that their planes will arrive on time, if at all.

Indeed, the concern is so great that the Federal government established the Future of Aviation Advisory Committee in May, a board tasked with scrutinizing the industry’s woes and making recommendations as to how to wrestle with them.

According to a press release from the committee, the main issues arise in providing for the safety of travelers, balancing the industry’s competitiveness, ensuring the industry’s monetary viability and addressing environmental challenges and solutions.

Following 9/11 and proceeding into the global recession that began in 2007, airlines around the world slumped precariously into the red. The drop off of passenger traffic and the spike in crude oil prices clipped the wings of global aviation and, until recently, profits seemed unattainable.

However, The International Air Transport Association reported recently that airlines around the world were forecasted to post $2.5 billion in profits in 2010, a prediction that contrasts starkly from its previous forecast for a loss of $2.8 billion.

This News seems like the silver lining, but the stark oscillation in forecasts underlies the fact that airline revenues are inextricably based on volatile circumstances—volcanic eruptions, terrorism, weather, labor strikes and, most salient of all, ever-shaky gas prices.

Additionally, Airlines struggled to the surface by using rampant ancillary fees and aggressive cost cutting, methods that are unpopular with the airlines’ customers.

According to the U.S. Energy Information Administration a dip in oil prices occurred because of consumers’ being wary of the deepening depression, but by the end of next year the price per barrel is supposed to climb to $84 as demand ramps back up.

The incline in prices is not predicted to level off. 

“In the transportation sector, despite rising prices, use of liquid fuels increases by an average of 1.3 percent per year, or 45 percent overall from 2007 to 2035,” according to the IATA report. Prices of oil are linked to the level of demand.

Most estimates maintain that alternative fuels will not be advanced enough to supplant liquid fuels for at least a decade, a forecast that ensures higher ticket prices for consumers.

In addition to rising ticket prices travelers will be continually beleaguered by congested airports. Airport lines provided enough angst amongst consumers that legislation is pending in congress to direct the Transportation Security Administration to uphold a program allowing passengers on a registered list to pass through lines more expediently. These passengers will have been previously screened and deemed to be low risk.

Despite such efforts, airport traffic is on the up and up and, for a lack of funds, airports cannot supply the infrastructure in manpower or airport property to expand and alleviate lines.

Mergers such as the one that nearly occurred between Continental and United will become more likely as airlines try to cope with the skyrocketing gas prices.

The USA Today reported that when airlines merge flights are usually atrophied and prices are usually raised.

Bill McGee, the author of the USA Today article, conducted a study in the St. Louis area following the merger of TWA and American airlines in which he analyzed the fares of six regional routes. 

Airlines that used to compete over the same routes were pulled under one umbrella, so the incentive for competition was undermined and prices were raised, according to the study.

Furthermore, pressure is continually mounting to stave off the environmental impact of the transportation sector, and the European Union even has a plan to charge carriers for their carbon emissions—a stipulation that would further strain the price of airfare.

The Future of Aviation Committee will meet four times before the end of the year, at which point they will report their findings and suggestions to U.S. Transportation Secretary LaHood.