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December 5, 2008 Friday
Updated
Dec 5, 2008
US air travel dives
US air travel plunged in November, the worst month for airlines since after the 2001 terrorist attacks as the recession eroded demand. -- PHOTO: ASSOCIATED PRESS

US AIR travel plunged in November, the worst month for airlines since after the 2001 terrorist attacks, as the recession eroded demand and a late Thanksgiving holiday pushed some trips into December, Bloomberg news reported.

American Airlines, United Airlines and Continental Airlines Inc. said this week that traffic fell at least 10 percent. Delta Air Lines Inc., the world's largest carrier, said today the drop on its main jet operations was 1.8 per cent, while miles flown by paying passengers on its regional units tumbled 20 per cent.

The results by American, United and Continental, the biggest US airlines after Delta, showed a worsening economy is crimping business and leisure travel. Delta said Dec 2 there may be record 'demand destruction' from a global recession.

'It's absolutely not feasible for them to keep bleeding passengers month after month,' said Mr George Godlin, an analyst at Moody's Investors Service in New York. 'Demand is likely to be under a tremendous amount of pressure in the coming months.'

The 14.5 per cent November decline at AMR Corp's American was the biggest since January 2002, when it fell 15.6 per cent.

UAL Corp's United had its 15th monthly decline in a row with a 17 per cent tumble, the steepest since December 2001.

Still, airlines are weathering the slide because they began cutting US capacity by 10 per cent or more in the second half and are benefiting from a 64 per cent collapse in jet-fuel prices since the July record, said Bloomberg.

'Not Dire'
'It's not dire at all,' said Mr Bob McAdoo, an analyst at Avondale Partners LLC in Kansas City, Missouri. 'Even if the economy drives demand down, they're still better off because oil is dropping faster' than traffic.

The first Monday after Thanksgiving is usually the second- busiest travel day of the holiday weekend, and that came Dec 1. Fort Worth, Texas-based American was among the carriers affected by the calendar shift, and the airline doesn't know yet whether November's results were a blip, said Mr Tim Smith, a spokesman.

'It's something we'll monitor to see if the numbers are continuing that trend or whether there are changes,' Mr Smith said in an interview.

Traffic is 'clearly down across the industry' because of the weak economy, Chief Financial Officer Kathryn Mikells of Chicago-based United said at a Dec 2 airline conference hosted by Credit Suisse Group AG in New York.

Cuts in flying
Delta's decrease was the smallest among the big US airlines, because most of its cuts in seating capacity came at regional carriers including Comair. Mainline traffic dropped 12 per cent at Northwest Airlines, which Atlanta-based Delta acquired in October.

As a group, the seven largest airlines posted a 10.8 per cent slide in traffic from a year earlier.

Delta said this week it will reduce seating capacity by as much as 8 per cent more in 2009 and eliminate an unspecified number of jobs to pare expenses.

Southwest Airlines Co, the biggest low-fare carrier, plans to reduce capacity by as much as 5 per cent in the first quarter. That will be the first time since 1990 that the Dallas-based airline has shrunk flying from a year-earlier quarter.

Mr Dan McKenzie, a Credit Suisse analyst, said in a Dec 3 note that the industry needs to slash flying by 5 per cent to 10 per cent more than it's done already. The cuts of at least 10 per cent at the biggest carriers announced this year entailed the grounding of 460 jets and eliminating 26,000 jobs.

The Bloomberg US Airlines Index, which consists of the 13 biggest carriers, has fallen 36 per cent this year.

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