Fear of flying A special report on air travel l June 16th 2007 Republication, copying or redistribution by any means is expressly prohibited without the prior written permission of The Economist The Economist June 16th 2007 A special report on air travel 1 Fear of ying Also in this section In the land of free ight America was rst to deregulate, but now it’s snowed under. Page 3 Ready for take-o Asia is set to become the world’s biggest air- travel market, but it will take time. Page 5 The battle of the North Atlantic Europe is allowing more competition, but dogghts continue. Page 7 Fly me home, James Travelling in an executive jet is just the ticket. Page 9 Watch that twitch How airport security identies suspicious Air travel is often nasty, brutish, long and unprotable. But it need characters. Page 10 not be like that, says Paul Markillie FTER ying in circles for nearly an hour, ing is cheaper and easier to arrange than Travelling green tonight Athe British Airways pilot announced: ever before, but it is also more hassle for Aircraft are getting cleaner all the time. Page 11 Ladies and gentlemen, I’m glad to say we the passenger. Once only the rich ew; can now stop contributing to the future now everyone can. And with a bit of ex- generation of orange groves on the South ibility it is possible to buy a seat at the back Time to land Downs and start our approach to London of an aeroplane for only one-tenth of what Lots of little things could make air travel a Heathrow. someone else is paying to sit at the front, whole lot better. Page 13 It was a journey typical of what is good going to the same place. The range of ser- and bad about modern air travel. As many vices available spans no-frills airlines that trips now do, it began on the internet. The charge for every extra, including drinks web has made it possible for passengers to and meals, to carriers with luxurious busi- be their own travel agents by comparing ness and rst-class cabins with compli- fares and schedules and booking ights mentary champagne, massage and spa- and at prices much lower than a decade cious sleeper seats. ago. The seat was also chosen online, the check-in completed and even the boarding Aggravating circumstances pass printed out at home before leaving for But whether in rst class or economy, air the airport, avoiding the usual queue at the travel often spells aggravation. During airline counter. peak times many airports and airlines are Not that it mattered, because there was now operating so close to capacity that another queue to be joined in a tent out- bad weather or technical glitches can side the terminal where it took an hour to quickly create chaos. If they want to add reach the security checkpoint. There a mê- runways and terminal buildings, airports lée of people were partially undressing, must battle with local communities deter- rummaging through their bags to remove mined to stop them from expanding. Secu- laptop computers and mobile phones, and rity checks have become more rigorous to putting liquids and gels into small plastic counter the ubiquitous risk of terrorism. ..................................................................... bags. Unsurprisingly, the aircraft was late And then there is the question nagging at The photograph on the cover of this special report leaving the gate and then had to queue to passengers’ green conscience: should they shows TWA mechanics donning propeller hubs as hats. reach the runway. The orange-grove-creat- be ying at all? Aviation is a small but fast- It was taken at La Guardia airport, New York, in 1941. ing return journey was late because the air- growing contributor to the greenhouse More articles on air travel are at craft had been late arriving. And the ight gases responsible for climate change. All www.economist.com/airlineindustry had to be stacked south of London be- those delayed aircraft ying in circles over cause of congestion at Heathrow. Britain’s South Downs are adding need- An audio interview with the author is at As air travellers’ horror stories go, this is lessly to global warming. www.economist.com/audio a mild one. But it is only too common. Fly- What can be done about it? Expanding1 2 A special report on air travel The Economist June 16th 2007 2 airports, especially in developed econo- reects the emergence of low-cost airlines. mies, will not become any easierand In Europe, nearly a third of all short-haul Making money again 2 even in some developing ones, such as In- seats are now provided by low-cost carri- Aviation industry: dia, where airports are close to bursting, ers. These carriers are widely believed to Operating margin, % Net profit, $bn building new ones is plagued with pro- have been responsible for the growth in air 6 10 blems. Terrorism shows no sign of easing. travel, and they have certainly played their And there is no prospect of any technologi- part, not least in forcing down the fares of 3 5 cal breakthroughs to make aviation dra- established airlines. But studies show that + + matically more ecient and cleaner in the the market would have grown anyway. 0 0 – near future. Areport last year by Britain’s Civil Avia- – 3 5 In some ways the industry is a victim of tion Authority found that overall growth FORECAST its own success. The trend in passenger in air travel has not been accelerating since 6 10 numbers has been relentlessly upwards the emergence of low-cost airlines in the despite periodic slumps caused by econ- early 1990s. Instead, they seem to have 9 15 omic downturns, oil shocks, wars and taken market share from other carriers, in 1998 2000 02 04 06 08 Source: IATA scares about the spread of diseases such as particular the charter airlines that once SARS. The terrorist attacks on America in dominated Europe’s holiday routes. What September 2001 were followed by a steep really stimulates air travel, most experts Successful airlines such as America’s decline in passengers, but within a year or agree, is not so much low fares (after all, tra- Southwest and new ones such as JetBlue so numbers had recovered. In 2006 people vel invariably entails other expenses too) have emerged. Dubai’s Emirates is setting took just over 2 billion journeys on sched- but growing prosperity. the pace in customer service. And Malay- uled airlines worldwide, 4% up on the year Yet despite rising passenger numbers, sia’s AirAsia, the leading low-cost operator before, according to the International Civil and good returns for some carriers, many in that region, is about to usher in a new Aviation Organisation. Measured by kilo- of the world’s airlines are having a hard era of cheap long-haul services. metres travelled by passengers, trac was time of it. Since 2001 they have collectively But these are exceptions. Too much of up by around 5%. lost more than $40 billion, mostly in Amer- the air-travel business remains protected By 2010 another 500m passengers are ica, where airlines have only just started to from genuine competition. That makes likely to join the fray (see chart 1), predicts become protable again. The industry is many airlines less t than they should be, the International Air Transport Associa- some $200 billion in debt. and more vulnerable when things get tion (IATA). The trade group, which repre- Globally, IATA’s members almost toughas they may do if some big econo- sents some 250 of the world’s airlines, esti- broke even last year and are expected to mies continue to slow. A few of the low- mates that by then America’s domestic make a combined net prot of $5.1 billion cost carriers in both America and Europe market for air travelat present the largest this yeara net margin of just 1.1% on com- are already starting to feel the pinch. in the world, with around 750m passen- bined revenues of $473 billion (see chart 2). The trouble with their product is that it gers a yearwill have been overtaken by It’s peanuts, declares Giovanni Bisig- is highly perishable: once an aeroplane both Asia’s and Europe’s. nani, IATA’s director-general. Airline Busi- takes o, the empty seats lose all value, so That does not mean America will get ness, an industry publication, reckons that airlines need to do what they can to ll any less busy. We believe we are going to as a group the world’s top 150 airlines, in- them. The average percentage of seats sold have to handle between two and three cluding some low-cost carriers that are not on each ight, known as the load factor, times the trac we have right now, says members of IATA, broke even in 2005. reached a record 76% for the world’s air- Marion Blakey, head of the Federal Avia- lines last year; in America it crept above tion Administration. Congestion delays Peanut counters 80%. This is good for airlines, but not so are beginning to cost enormous amounts So why, in relatively good times, does the good for passengers. Now that the internet of money. airline industry struggle even to cover the allows passengers to pick their own seats, Most of the recent growth in air travel cost of its capital? Peanuts provide a clue. a long-held belief in the travel industry has has been in the economy section, which As the former boss of Italy’s Alitalia, Mr Bi- been conrmed: passengers generally signani remembers the time when IATA prefer an empty seat next to them.