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Airlines’ New Normal: More Seats, Fewer Flights
Industry boosts capacity by adding seats on existing jets and replacing smaller planes with larger ones
ENLARGE
U.S. airlines are increasing capacity on existing jets. PHOTO: ASSOCIATED PRESS
By SUSAN CAREY and
JACK NICAS
Updated July 2, 2015 7:43 p.m. ET42 COMMENTS
U.S. airlines are expanding at a relatively rapid clip. But that isn’t necessarily producing better service for fliers.
The disconnect arises from an industry technique known as “upgauging,” in which airlines increase capacity by adding seats on existing jets and replacing smaller planes with larger ones. As a result, U.S. airlines are offering 12% more domestic seats this month than two years ago, but 4.4% fewer flights, according to a Wall Street Journal analysis of schedule data.
For fliers, the impact is mixed. Larger planes are generally more comfortable, fly faster and offer larger overhead bins and first-class cabins. More seats bring “the potential to possibly get a better fare or an upgrade,” said Henry Harteveldt, cofounder of Atmosphere Research Group, a travel-industry advisory firm.
But fewer flights mean fewer options for travelers, who have to settle for inconvenient schedules more often. Smaller cities are also at higher risk of losing some service as airlines consolidate traffic onto fewer jets. Plus, airlines sometimes remove a galley or lavatory and trim legroom to fit extra seats, although new seat designs help minimize the crunch. Denser seating makes it “that much more of a struggle to get your carry-on into the overhead bin,” Mr. Harteveldt said.
ENLARGE
How airlines add and reduce service is under a new spotlight amid a Justice Department investigation revealed this week into whether American Airlines Group Inc., United Continental Holdings Inc., Delta Air Lines Inc. and Southwest Airlines Co. colluded by limiting service increases to protect profit margins. Antitrust authorities, who began the probe about two months ago, requested documents detailing the carriers’ monthly capacity data back to January 2010 as well as reports of meetings with analysts, investors and other airlines in which capacity plans were discussed.
Aiding the financial turnaround has been relatively modest growth. But this year, amid stronger demand, mounting profits and cheap fuel, carriers are ratcheting up expansion. That has deflated their stocks as investors worry that a competitive race will lead to a slump when demand weakens or fuel prices rebound, as has happened in previous cycles.
Airline executives describe upgauging as a smarter, less-risky way to grow. It cuts unit costs—an industry metric measuring the cost to fly one seat one mile. It gives airlines more opportunities to sell items like premium seats and Wi-Fi service. And it reduces congestion at crowded airports, which helps eliminate delays and cancellations, particularly during storms.
Most importantly, airlines don’t have to buy or lease new planes to increase traffic. “We’re making the planes we have more efficient,” Glen Hauenstein, Delta’s chief revenue officer, said in a recent interview. “Without building any infrastructure, we can transport more people.”
Indeed, the average domestic aircraft now has 107 seats, compared with 95 seats five years ago, according to the trade group Airlines for America.
Planes are denser in part because airlines are cramming more seats into many of their existing jets. American, for instance, is adding 10 seats to its Boeing 737-800s, bringing the total to 160. United has converted its Airbus A320s to 150 seats from 138 to 144 seats.
More seats mean less legroom, though the carriers say fliers can hardly tell, in part because of lighter-weight, slimmer seats that have redesigned tray tables and relocated seatback pockets. Carriers are also buying larger versions of the planes they already have. Southwest, for example, has 575 737-300s and 737-700s with 143 seats, but now is buying larger 737-800s with 175 seats. It now has 92.
The biggest casualty of upgauging is the 50-seat regional jet, which airlines have used for years between their hubs and small cities. With so few seats, the planes always had higher unit costs, made worse by years of high oil prices. In the past five years, U.S. airlines have cut the number of domestic flights made with planes of 50 seats or fewer by about a third.
As airlines replace 50-seat jets with larger planes, some of the smallest cities don’t have the demand to justify those larger jets and they lose service. “I sure hope the demand from small communities can keep pace with the changes we are making,” said Andrew Nocella, American’s chief marketing officer. “It’s something we’re really aware of.”
Upgauging has left many U.S. airports with more seats but fewer departures over the past several years. In July 2012, Delta operated 11 daily flights from Jackson, Miss., eight of them on 50-seaters. This month, the company said, it is offering eight daily flights, nearly all on larger, mainline jets, and its seat count is 8% higher. From July 2013 to this month, the airlines that serve Omaha, Neb.’s Eppley Airfield have collectively added 9.4% more seats, while reducing departures 6.7%.
In Monterey, Calif., fliers formerly had the choice of four daily flights to San Francisco on 27-seat turboprops. In March United replaced those turboprops with 50-seat jets but only two flights a day, says airport spokeswoman Jennifer Hickerson. Overall, Monterey’s airport has 10% more seats on 15% fewer flights this month compared with a year ago.
“It’s unfortunate [travelers] have fewer options,” Ms. Hickerson says. “But people do like flying on the bigger planes.”
Industry boosts capacity by adding seats on existing jets and replacing smaller planes with larger ones
U.S. airlines are increasing capacity on existing jets. PHOTO: ASSOCIATED PRESS
By SUSAN CAREY and
JACK NICAS
Updated July 2, 2015 7:43 p.m. ET42 COMMENTS
U.S. airlines are expanding at a relatively rapid clip. But that isn’t necessarily producing better service for fliers.
The disconnect arises from an industry technique known as “upgauging,” in which airlines increase capacity by adding seats on existing jets and replacing smaller planes with larger ones. As a result, U.S. airlines are offering 12% more domestic seats this month than two years ago, but 4.4% fewer flights, according to a Wall Street Journal analysis of schedule data.
For fliers, the impact is mixed. Larger planes are generally more comfortable, fly faster and offer larger overhead bins and first-class cabins. More seats bring “the potential to possibly get a better fare or an upgrade,” said Henry Harteveldt, cofounder of Atmosphere Research Group, a travel-industry advisory firm.
But fewer flights mean fewer options for travelers, who have to settle for inconvenient schedules more often. Smaller cities are also at higher risk of losing some service as airlines consolidate traffic onto fewer jets. Plus, airlines sometimes remove a galley or lavatory and trim legroom to fit extra seats, although new seat designs help minimize the crunch. Denser seating makes it “that much more of a struggle to get your carry-on into the overhead bin,” Mr. Harteveldt said.
How airlines add and reduce service is under a new spotlight amid a Justice Department investigation revealed this week into whether American Airlines Group Inc., United Continental Holdings Inc., Delta Air Lines Inc. and Southwest Airlines Co. colluded by limiting service increases to protect profit margins. Antitrust authorities, who began the probe about two months ago, requested documents detailing the carriers’ monthly capacity data back to January 2010 as well as reports of meetings with analysts, investors and other airlines in which capacity plans were discussed.
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The four airlines, all of which have absorbed rivals in a series of mergers that began in 2008, now control more than 80% of the domestic air market. That consolidation was blessed by the Justice Department and has helped lift the industry to record profits.
Aiding the financial turnaround has been relatively modest growth. But this year, amid stronger demand, mounting profits and cheap fuel, carriers are ratcheting up expansion. That has deflated their stocks as investors worry that a competitive race will lead to a slump when demand weakens or fuel prices rebound, as has happened in previous cycles.
Airline executives describe upgauging as a smarter, less-risky way to grow. It cuts unit costs—an industry metric measuring the cost to fly one seat one mile. It gives airlines more opportunities to sell items like premium seats and Wi-Fi service. And it reduces congestion at crowded airports, which helps eliminate delays and cancellations, particularly during storms.
Most importantly, airlines don’t have to buy or lease new planes to increase traffic. “We’re making the planes we have more efficient,” Glen Hauenstein, Delta’s chief revenue officer, said in a recent interview. “Without building any infrastructure, we can transport more people.”
Indeed, the average domestic aircraft now has 107 seats, compared with 95 seats five years ago, according to the trade group Airlines for America.
Planes are denser in part because airlines are cramming more seats into many of their existing jets. American, for instance, is adding 10 seats to its Boeing 737-800s, bringing the total to 160. United has converted its Airbus A320s to 150 seats from 138 to 144 seats.
More seats mean less legroom, though the carriers say fliers can hardly tell, in part because of lighter-weight, slimmer seats that have redesigned tray tables and relocated seatback pockets. Carriers are also buying larger versions of the planes they already have. Southwest, for example, has 575 737-300s and 737-700s with 143 seats, but now is buying larger 737-800s with 175 seats. It now has 92.
The biggest casualty of upgauging is the 50-seat regional jet, which airlines have used for years between their hubs and small cities. With so few seats, the planes always had higher unit costs, made worse by years of high oil prices. In the past five years, U.S. airlines have cut the number of domestic flights made with planes of 50 seats or fewer by about a third.
As airlines replace 50-seat jets with larger planes, some of the smallest cities don’t have the demand to justify those larger jets and they lose service. “I sure hope the demand from small communities can keep pace with the changes we are making,” said Andrew Nocella, American’s chief marketing officer. “It’s something we’re really aware of.”
Upgauging has left many U.S. airports with more seats but fewer departures over the past several years. In July 2012, Delta operated 11 daily flights from Jackson, Miss., eight of them on 50-seaters. This month, the company said, it is offering eight daily flights, nearly all on larger, mainline jets, and its seat count is 8% higher. From July 2013 to this month, the airlines that serve Omaha, Neb.’s Eppley Airfield have collectively added 9.4% more seats, while reducing departures 6.7%.
In Monterey, Calif., fliers formerly had the choice of four daily flights to San Francisco on 27-seat turboprops. In March United replaced those turboprops with 50-seat jets but only two flights a day, says airport spokeswoman Jennifer Hickerson. Overall, Monterey’s airport has 10% more seats on 15% fewer flights this month compared with a year ago.
“It’s unfortunate [travelers] have fewer options,” Ms. Hickerson says. “But people do like flying on the bigger planes.”
