A discussion about the airline industry, airline employees, and all things related

A hundred years ago no one imagined an industry based on air travel, but today it is nearly to the point in which air travel is an alternative form of mass transit.  The airline industry of 5 years from now will look similar in structure, but the number of carriers, service, and schedules will be completely different. 

Structure:  The basic structure for most legacy carriers in the is centered on the hub and spoke system.  This is where most carriers have three or four major cities in which most flights connect through if you are transgressing the nation or just flying to grandma’s house.  American, United, Continental, Delta, and Northwest all have this system.  Some of the low cost carriers such as Southwest and JetBlue have a point to point system in which the carrier does not necessarily have a major fleet size at a particular airport but flies city to city and then back again.                   

I do not see any of the legacy carriers abandoning their current structure any time soon.  Carriers such as Frontier and AirTran, both LCCs, have successfully built companies with the hub and spoke system.  Also they have all invested so much money in their respective hubs.  United spent a great deal when the new Denver Airport opened.  American just redid their JFK hub.  I do not see the LCCs redoing their business plans either.  JetBlue has just released pictures of their new terminal in New York and Southwest has proven that their system works.

photo from London 2012.org

Number of Carriers:  It is amazing to see the tremendous growth of the industry in Asia and Europe while here at home carriers are struggling to keep themselves around to see the next quarter.  I believe that the number of carriers here in the will be smaller than what we have now.  After deregulation the airline industry has had their struggles.

I foresee Northwest struggling to make it back to their top mark.  They will be a much smaller airline because of the locations they fly too.  Smaller upper-Midwest cities do not need huge planes nor do they need 24 daily flights to their city.  Northwest also has a lot of code share partners, especially in Europe.  The only thing that could save NWA is the fact that they have quite a few destinations in Asia. 

Delta is going to make it.  However, they will be much, much, much smaller.  Look for Delta to pull back on the west coast, making their regional air feeder to take up the slack.  Delta will probably focus on the Southeast, , the Caribbean, and some European cities.  But their code shares with European carriers should pick up most of those schedules.  They will creep their way up the east coast and should implant fairly nicely on that eastern Atlantic coast.  

I worry about Continental.  They have been having some issues containing JetBlue at Newark and have had some issues with market share losses in Houston to cross town rivals Southwest.  They have big hubs at Newark and Houston so they have good locations but the low cost carriers are going to kill them if they don’t find some ways to keep their market share.  The problem is that when they were in bankruptcy in the mid to late nineties, they reduced their company to much.  The company is too small to be a big national carrier and too small to meet all the needs of the flying public.  Asia is the key; airlines with a lot of Asian destinations will survive the next 5 years.  

Watch out for some mergers in the regional feeder airlines.  They are having some of their most profitable years.  Watch from them to get greedy or over confident and start gobbling up some of the smaller feeders.  

Service:  American Eagle announced a few weeks ago that they would be in a trial phase in which they started charging for soda, pillows, and snacks on their flights out of Los Angles to other California destinations.  American wants to know if these extra ‘perks’ are something people are willing to part with or if they are needed to keep their customers coming back.  

Unfortunately service in the next five years is going to suffer especially if you don’t pay for it.  If you are flying economy/leisure/ coach on any of the legacy carriers in the next 5 years don’t expect to have anything exciting.  A few airlines are starting to install some nice technology but those kinds of perks will be a rarity, and most likely they will have a nice charge attached to them.  Carriers that have on-demand television and radio such as Frontier and JetBlue will have an easy time convincing customers to fly with them.  If you are flying in Business or First class luck you.  You will have the best service since airlines will compete heavily for your dollars.  

Though no one knows exactly what the airline industry will actually look like in five years much less tomorrow, it will be interesting to see how the industry works out their situations and how many and who will survive this market.