Flying Time

Flying Time

Copyright 2008, Traffic World, Inc.

It can be hard to find something positive in the numbingly long waits and generally dehumanizing treatment passengers are subjected to at airports these days, but here''s one try: It gives anyone who is paying attention a close-up look at a transportation operation gone thoroughly awry.

From crowds of frustrated travelers gathered around exasperated gate agents to aircraft sitting idle throughexpensive delays, the airline business is a transportation nightmare these days.

The grounding of large numbers of jets this month because of safety inspection problems may well have been a one-time incident. But at airports around the country and in new financial reports from the carriers themselves, there are growing signs the airline industry is facing enormous new pressures and could be on the way to enormous changes.

It''s tempting, particularly after long waits at airports and mad dashes to connecting flights, to believe the airlines brought many of their problems on themselves.

They certainly aren''t setting great examples for customer service. But the fact is, the real driver behind the airlines'' troubles is well outside the carriers'' control and that''s particularly worrisome because it''s starting to impact the shipping business.

That driver, of course, is jet fuel.

One shipper, outraged that parcel carriers are hiking fuel surcharges sharply in May (from 6.25 percent to 7.75 percent for ground shipments and from 20 to 25 percent for air shipments), complained that the surcharges have doubled in a year. That brought the seemingly rhetorical question, has the price of jet fuel doubled in a year?

Well, no, not exactly a year. But it has doubled in 13 months.

The price of New York Harbor jet fuel hit $3.685 a gallon in the second week of April. The average price in March 2007, according to the Energy Information Administration, was $1.884. Even worse, the price has grown by $2 a gallon since the start of 2007 and by nearly $1 a gallon this year alone.

It''s no wonder, then, that UPS saw a veritable rush by shippers away from express services in the first quarter toward cheaper ground transport. Along with the higher fuel costs, that pushed UPS''s operating margin on domestic package business down from 15.3 percent to 12.4 percent.

And fuel costs are a major reason four smaller passenger airlines have failed in recent weeks and the larger airlines are scrambling to rein back capacity even more as they report triple-digit losses.

Delta Air Lines and Northwest Airlines may hope to combine forces, but merging their grim financial reports for the first quarter brings an ugly result - $10.5 billion in combined losses. Northwest''s fuel spending went up $445 million over last year.

Delta and Northwest are trying to solve their problems by consolidating, while UPS and its shippers are taking different approaches to cutting those soaring costs.

They could always take some lessons, of course, from the actions of the large passenger carriers. But those aren''t lessons they want to learn first-hand.