OAG Review of the Year 2003 (US Media)

U.S., World up 3% Since January, Recovery from War, SARS

Chicago—December 29, 2003 – We will remember 2003 as a historic period for the airline industry. The same year that celebrated the centenary of powered flight provided a snapshot of industry ups and downs—as a result of international conflict, SARS and an unsure economy—ultimately proving to be a year of stabilization.

OAG, the world’s leading source of independent flight schedule information has captured global airline data and trends for 2003, identifying the affects of the Iraqi war, SARS and the popularity of low cost carriers on the global travel industry.

The following are key highlights for 2003:

Overall market by region

• Worldwide, the year ended with a 3% increase in the number of flights since January. While flight levels were generally stable throughout the year, we are able to see significant variance in the immediate aftermath of the Iraqi War when over 10,000 flights were pulled from airlines’ networks.
• Globally the industry bounced back from the affects of SARS and the war, adding more than 25,000 flights between May and July, returning to a traditional, busy summer period.
• The US domestic market experienced a year of stabilization mirroring worldwide trends and ending the year with 3% more flights in December than January 2003.
• The UK domestic market is the only region to show any drop in flight levels over the year, falling by 4% over January.
• Flights within Asia Pacific have shown the biggest growth in 2003 up 11% since January.

Specific U.S. Routes
As a result of specific route reductions and the addition of new flights, OAG took a look at several popular routes to track frequency variances from January to December 2003.

• Atlanta to/from New York: 12% growth
• Atlanta to/from San Francisco: 50% growth
• Boston to/from Chicago: 11% growth
• Chicago to/from Denver: 6% growth
• Chicago to/from Seattle: 19% growth
• Los Angeles to/from New York 7% growth
• Los Angeles to/from St. Louis: 45% reduction
• Los Angeles to DC: 6% growth
• New York to Orlando: 1% reduction
• New York to St. Louis: 10% growth
• DC to St. Louis: 65% growth

Financial Centers

• Chicago and New York both saw increases in flight schedules throughout 2003. Chicago added 9% more flights; New York added 5%--in part due to the introduction of more low-fare flights on the transcontinental route. Both regions saw small drops in September, as a result of the second anniversary of 9/11. Both regions also decreased frequency in April and May following the outbreak of the Iraqi war and SARS.
• Miami finished the year with 2% fewer flights than it offered in January, noting major cuts on the anniversary of September 11, as well as in early summer.
• Los Angeles offered a steady number of schedules throughout 2003, finishing just 5% below where it was in 2003. As in other parts of the country, Los Angeles flights were cut most significantly in March, April and September.
• London airports reflect a mixed picture. Gatwick has seen a slight fall in the number of flights over the course of the year but a slight increase in the number of seats possibly reflecting the use of fewer but bigger planes in order to gain cost efficiencies. Heathrow has seen increases in both the number of flights and seats – supporting the demands for an additional runway in the near future. Stansted, which has continued to attract low cost routes, has seen 133 additional flights added over 2003, over 60,000 additional seats.
• Singapore Changi airport saw a massive drop in the number of flights at the height of the SARS virus, between April and May, over 750 flights. However, the Asia Pacific region overall has managed to bounce back and Singapore Changi only shows a slight decrease in the number of flights over the whole year. Beijing airport has added over 700 flights in 2003, mirroring the ongoing confidence and increased frequencies and seats both within and to/from China.

The effect of war and SARS
OAG has tracked global flight levels on a weekly basis since the start of the Iraqi War. The weekly statistics measure flight levels against the base week of March 17th (just before the outbreak of hostilities).

• In the week immediately following the outbreak of SARS, global flight levels were down 0.1%, the most severe drop occurred at the end of April, tumbling to 3.2% lower than before the outbreak.
• Flights in the US market appear to have been most severely affected by the conflict, US domestic flights fell by 3.3% at the end of April and US to Western Europe flights fell by 5.5% in the same week.
• Flights to and from Asia Pacific fell by 6.6% at the beginning of May, but recovered quickly, climbing again less than a month later.

Low-cost carrier sector
The low cost carrier sector remains a strong influence in the global flight industry. The low cost carriers in all regions have increased their market share.

• Low cost carrier flights to and from the UK now represent a quarter of all flights, compared with 21% in January. Low cost within the UK is up from 17% to 21%. Low cost within Europe is up from 7% to 11%.
• Low cost carriers within the US continue to account for 14% of total flights.
• Domestically, there was significant low-cost carrier activity. Delta launched its low-cost carrier Song; United unveiled its competing carrier “TED” due out in 2004. Southwest continued to gain ground, while JetBlue continued to impress the industry, with 96% load factors. ATA improved its onboard service and added additional legroom. AirTran debuted cross-country non-stops and expanded its network, and Frontier pushed its low-fares across the country.

Alliances

• The oneworld alliance, which includes British Airways and American Airlines, has seen a –5% drop in the number of flights it represents. In contrast, both SkyTeam and Star Alliance have increased their totals by 5%. The growth of the SkyTeam alliance may well continue into next year with the potential addition of KLM’s flights following its recent merger with Air France.

Safety and Security

• Domestically 2003 was a year of relative success for safety and security. TSA implemented new policies to mitigate security delays and the process is predictable for travellers.
• 2003 also marks a year absent of any major air crashes

Hotels

• The big story for 2003 is the Web Wars as hotels realized they had lost control of pricing and inventory to many 3rd party booking sites. Mid-year, hotels began fighting back with “lowest rate guarantees.”
• Occupancies in 2003 improved, while rates remained stable. Business travellers have not yet returned to the numbers seen in the late 90’s.

Technology

• Travellers actively switched to “do-it-yourself check-ins” using airline computer terminals
• Self-service check-in at hotels is also becoming more readily available
• Wireless took a sharp spike in availability at hotels and more travellers are demanding free high-speed Internet. Starwood hotels introduced an experimental phone/email/net/fax-in-one service for $15 a day.

“Despite challenges domestically and abroad, 2003 resulted in the stabilization of airline schedules,” said Joseph F. Laughlin, Vice President, Data, OAG Americas. “We will remember the airlines’ strength and resiliency in the face of many challenges.”