Robert Silk
It's not a stretch to say that flying is almost as central to American life these days as driving.
Some 87% of American adults say they've traveled by air in their lifetime, according to this year's Air Travelers in America survey from Airlines for America (A4A). That's up from 73% 25 years ago and 49% in the early 1970s.
One major factor for the increase has been the growing affordability of air travel. Domestic airfare, adjusted for inflation and including bag fees, averaged 25% less last year than it did in 2000, according to A4A.
The advent and growth of ultralow-cost carriers (ULCCs) such as Spirit and Frontier have played an especially important role in recent years of opening the skies to more flyers, just as Southwest did during in the 1980s and 1990s.
But are the days of nearly ubiquitous flying nearing an end due to structural changes in the cost of running an airline?
During a panel discussion at the Regional Airline Association Leaders Conference in Washington late last month, two experienced industry investment analysts said they believe so. Their arguments are both compelling and worrisome.
Mike Linenberg of Deutsche Bank estimated that the U.S. could revert to a point where only 65% to 70% of the population have traveled by air.
Helane Becker, analyst for Cowen, offered a still more pessimistic view.
"You might have to be really rich at some point to fly," she said.
Fueling the analysts' views are changes in airline cost structures that could be long-term. On top of general inflation across the U.S. and global economies, U.S. airlines today are dealing with substantial inefficiencies caused by the nationwide shortage in air traffic controllers and by supply chain constraints.
One result has been a need for more staffing redundancy than before Covid. Employment at the 13 U.S. passenger airlines that the Bureau of Transportation Statistics defines as "major" was up 12.5% in July compared with July 2019, even though the large airlines flew just 1.5% more seats.
United CEO Scott Kirby has repeatedly stated his view that the relative need for more staff at airlines will be long-term.
Other long-term costs have also gone up. Notably, since last winter, pilots' unions across the U.S. airline industry have negotiated contract increases in the 30% to 40% range for the next four years.
Cost pressures, Linenberg and Becker argued, are likely to force discount carriers like Frontier and Spirit to raise ticket prices. But that's a problem for their business models, which are built around inducing demand with cheap airfare.
It's too soon for the evidence to be in. But there are signs that full-service carriers are better positioned to operate in today's high-cost environment than ULCCs.
In 2019, Spirit recorded an operating profit margin of 13.1%, besting legacy carriers American, Delta and United. But for the quarter that ended on Sept. 30, Spirit has projected an operating loss of 15%. Frontier has also advised investors that it will post losses for the September quarter.
Meanwhile, American, United and Delta are all expected to report operating profits for the third quarter. (Delta was scheduled to present its Q3 results one day after this issue went to press.)
For U.S. consumers, the flying experience is deeply stratified based on what consumers can afford to purchase. But in terms of who can afford to fly at all, it's admirably democratized -- a state of affairs that bolsters families, increases personal enrichment and, of course, aids the entire travel industry.
Here's hoping it can stay that way.