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For airlines (but not for flyers), 2007 was a very good year

According to a report issued this week by IBISWorld, an independent publisher of business research, 2007 has been a banner year for the airline industry, the first to reverse a five-year decline in the airlines’ fortunes following 9/11.

The report ticks off improvements in a number of areas, including fuel efficiency and labor productivity, noting that, “the real cost/mile for air travel remains competitive versus other transportation alternatives and also compares favorably to broader measures of consumer inflation over time.” Certainly no one disputes the long-term decrease in the real cost of travel—a trend that was well established even before the desperate cost cutting of the past five years.

Also prominent in the report is the effect of the airlines’ capacity adjustments over the past five years, and the effect of those adjustments on load factors (percentage of seats occupied): “[D]omestic passenger counts have expanded by nearly 20 percent yet available seat miles have only increased by 9.5 percent.” The inevitable result of a greater increase in passengers than in available seats: the load factor on domestic flights has steadily increased, from 70.3% in 2002 to 79.0% in 2006. While data for the current year isn’t yet available, projections are for an average load factor in excess of 80%.

If you’ve traveled lately, you know firsthand that the combination of those full flights and the airlines’ skimpy legroom makes for an in-flight experience positively guaranteed to induce air rage.

The picture that emerges is of flying as cheap but cramped and stripped of even the most basic amenities. In fact, without intending to, the report supports the contention that the interests of the airlines are at cross purposes with at least some of the interests of their customers.

What flyers want is good service at an attractive price. What they’re getting—and can expect to continue getting for the foreseeable future, because it has proven to be a formula for financial success—is shabby service at an attractive price.

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