Scrapped Flights Threaten Reeling Industry

Loss Of Money And Goodwill May Spread For Airlines Already Beset With High Fuel Costs

(CBS/AP)  Another day and hundreds more flights grounded. The financial toll and loss of goodwill among travelers from the debacle that spread further Thursday beyond American Airlines' massive cancellations could be severe - on an industry already reeling from high fuel costs.

Lawmakers were asking questions and some fed-up air travelers headed for trains. Others gave the airlines a pass, saying the companies were doing the best they could.

"I'm really upset, but I'm trying to keep a positive attitude for the sake of my children and my husband, who's wandering around looking for us," said Rainie Nelson, a 39-year-old from Park Ridge, Ill., who was stranded at Chicago O'Hare International Airport with a toddler and an infant while on their way to Palm Springs, Calif.

Of American employees, she said, "There is no point in yelling at them. It's not their fault. So, I'm going to be as nice as I can be."

American Airlines is looking at 250,000 people or more who will be bumped from their flights this week, reports CBS News correspondent Nancy Cordes.

Cordes reports that American hasn't even reached the halfway mark with their inspections.

Of the 300 MD-80s in its fleet, it's inspected and fixed the wiring harnesses in just 130.

Mingo Valencia, a 60-year-old stuck at Hartsfield-Jackson Atlanta International Airport while heading home to Midland, Texas, wasn't so gracious.

"Poor management," he said bluntly.

Congress also weighed in Thursday. The FAA official who ordered the audits last month, Nicholas Sabatini, faced tough questions from a Senate subcommittee about the agency's lax oversight of airlines and his own accountability for recent breakdowns. The FAA noted that airlines had 18 months to complete the work on the MD-80s since the initial order was issued in September 2006.

"The carrier was not in compliance with an airworthiness directive," Sabatini told Congress, "we brought that to their attention and they made the right decision."

American, a unit of Fort Worth, Texas-based AMR Corp., had canceled nearly 2,500 flights this week as of Thursday due to the safety inspections of its MD-80 aircraft following an FAA warning, and said an unspecified number of additional cancellations were expected through Saturday.

Alaska Airlines, Midwest Airlines and Atlanta-based Delta Air Lines joined the wave, each canceling a small number of flights on MD-80 aircraft on Thursday.

Other carriers like Continental Airlines, JetBlue Airways, AirTran Airways and Northwest Airlines said they passed the first round of FAA audits with a clean slate and did not expect extra maintenance work or flight delays. It was impossible to say whether that could change since the FAA is conducting another round of safety audits.

The cancellations come at a time of high fuel prices and mixed success among the major air carriers at getting domestic fare increases to stick. The fact that airplanes are flying very full is making it difficult for airlines that cancel flights to find empty seats on other carriers to rebook their passengers.

"This disruption is severe," said Webster O'Brien, an industry expert with aviation consulting firm Simat, Helliesen & Eichner. "People are going to be unhappy. There isn't going to be an easy way to walk everybody out of it."

No one knows for sure how much money the mess will cost the airlines, particularly American, which couldn't provide an exact estimate Thursday. Analysts say the toll at American could easily be tens of millions of dollars, perhaps much more. American would say only that the figure would be in the tens of millions.

Besides lost revenue from the canceled flights, American also was giving $500 travel vouchers to an unspecified number of inconvenienced passengers and putting some travelers up in hotels. There also could be transportation costs to and from hotels, extra overtime for employees and the long-term costs of losing goodwill among customers.

American spokeswoman Andrea Huguely said the company's number crunchers were working through the issue.

"We won't know the cost of this until probably Saturday night, when we expect to have all of our MD-80s back in service," she said.

Industry analyst Darryl Jenkins told Cordes that he estimates the cancellations have cost American $40 to 50 million.

"When you cancel a flight, that flight is totally spoiled," Jenkins said, "you can never fly that again. It's not like a can of paint where it's still on the shelf… it's gone."

The cost to other airlines also was unclear, and the pain could continue, analysts said.

"Just given the level of scrutiny, it wouldn't surprise me if there were more cancellations and groundings at other airlines," said Standard & Poor's analyst Philip Baggaley.

He said the disruption was worse than some major storms that have affected large airline hubs.

"The costs are fairly substantial," Baggaley said. "Given that the cancellations have been spread among a number of carriers, this will make it harder for airlines to turn around and try to raise fares, particularly in the weakening economy. It does indeed come at a bad time."

Some travelers looked for other modes of transportation.

Amtrak has seen a spike in passengers since the flight cancellations began earlier in the week, especially in the Northeast, spokesman Cliff Cole said.

"Our ridership was heavy yesterday, is heavy today and is likely to be heavy tomorrow, based on our reservations," Cole said Thursday.

Greyhound Lines Inc. spokesman Eric Wesley said he was unsure whether demand had increased because many bus customers buy tickets at the last minute.

At the Minneapolis airport, meanwhile, Tammy Kennedy of Indianapolis was frustrated by the American Airlines situation.

"First it was on, then it was canceled, then it was on again, then we got in the plane and sat on the runway in Chicago for an hour," she said Thursday of her flight to Minneapolis.

She said the flight caused her to run late for a meeting.

"I probably won't fly American again," Kennedy said.

[rudy654-2009]

Why not take a train ?!?
Posted by aspiritguide at 07:53 PM

The US rail system is pisspoor in this country. Delays are ridiculous. Most tracks have not been check nor thoroughly maintained. And service has been cut to most small towns. Europe has outdone our rail system 1000 percent better.

[rudy654-2009]

I knew that it was a matter of time that the ill management of American Airlines would catch up with them. They have been very poor to respond to customer complaints. I try to fly Continental, no matter what. Though they too have complaints, I just find them better than most. The sad thing is when we paid tax money to bail these airlines out after 9/11 their response was a thankless "get tough with customers, treat them dirty when you can" routine. Since 9/11 they have been creepy.

[cyberus-2009]

----
I smell a golden parachute deployment by a CEO and a subsequent govt bailout.

Posted by culturechang
----
Ya think? It''ll make the Bear-Stearns bailout look like chump change.

[culturechang]

I smell a golden parachute deployment by a CEO and a subsequent govt bailout.

[veteran72]

As the worthless dollar tanks worldwide, prices for gas, food, and all your necessities will finally exceed your ability to purchase them. Business'' will go under, banks will default, and pretty soon, you''ll find yourself in a soup line.
Thanks Bushies!!!!

[sbcarlosm]

The answer is simple....fly United

[schwarzzennegger]

P.S. Why not take a train ?!?

[schwarzzennegger]

Wow ! The good old USA is going down in flames now due to 8 years of an out-to-lunch government distracted by the fiasco in Iraq. With people like those in charge today, who needs to worry about terrorists ?

[gracchus1]

The blame is to be shared among the airlines and the FAA. First, I would abolish the FAA and let the NTSB regulate the industry. The FAA has gone beyond its useful time. Second, I would not be surprised if the airline industry goes back to regulation. The only unfortunate problem is that it will be much more expensive to fly. Over the past fifteen years, the airline industry has lost billions of dollars largely due to overpaid management, rising fuel costs, and expensive pensions. Hence, the current mess the industry is in that only will get worse. The airline industry has a formidable challenge to return to what it once was decades ago: a time when passengers were required to dress up and looked forward to air travel, airline ticket agents and flight attendants greeted every passenger with a smile, and airlines served delicious meals. The industry needs to go back to its roots, and rethink how to structure itself in the future, so that it meets the needs of all parties.

[davidlar2]

GasMan0186: So long as the government doesn''t bail out airlines, some will go out of business. Those that don''t go out of business will have more pricing power. As their pricing power increases, then new airlines can start up to compete on either price or service. The government keeping airlines in business (as after 9/11 and potentially now) that are weak competitors rather than letting them fail and ultimately being replaced by better airlines (ie goodbye United, hello Virgin America) really creates many more problems than it solves (like those we have now).

[gasman0186]

Not sure if any one realizes that jet fuel is now accounting for more than 40% of the airlines budget...with a setback like this affecting American and a few other airlines, the question of whether the airline industry as a whole can survive is a serious one. Just this past weekend, ATA, Aloha, and Sky Bus shut down, while not legacy carriers it is a disturbing trend that is certain to continue possibly with the bigger airlines to come. Unfortunately I dont think there is anything anyone can do about it really...

[sgtrds]

Hope U like fried rice, etc.!!

Posted by drf1499 at 06:12 PM : Apr 10, 2008

Great place for it on West Olympic in west L.A. called Hop Sings. Best beef fried rice in California, bar none.

I''m 73. Based on living thru events especially since 1960, this once great nation is now a "has been". China will be the next Superpower. Hope U like fried rice, etc.!!

[gasman0186]

Not sure if any one realizes that jet fuel is now accounting for more than 40% of the airlines budget...with a setback like this affecting American and a few other airlines, the question of whether the airline industry as a whole can survive is a serious one. Just this past weekend, ATA, Aloha, and Sky Bus shut down, while not legacy carriers it is a disturbing trend that is certain to continue possibly with the bigger airlines to come. Unfortunately I dont think there is anything anyone can do about it really...

[gasman0186]

Not sure if any one realizes that jet fuel is now accounting for more than 40% of the airlines budget...with a setback like this affecting American and a few other airlines, the question of whether the airline industry as a whole can survive is a serious one. Just this past weekend, ATA, Aloha, and Sky Bus shut down, while not legacy carriers it is a disturbing trend that is certain to continue possibly with the bigger airlines to come. Unfortunately I dont think there is anything anyone can do about it really...

[sgtrds]

So the Bush appopinted heads of the FDA are in bed with the airlines and lets them slide on safety inspections because they''ll cost them money, until whistle blowers turn them in and now some of the airlines are in trouble financially because they have to ground planes to inspect the planes like they should have been doing all along. Well I think the answer is obvious and I don''t know why Bush hasn''t proposed it yet! Taxpayer paid for government bailout! After all we can''t let the rich airline owners lose money can we!

[cyberdjs4]

@ Rudy2281.

Dude, don''t forget that we also keep thinking religion will make all of your valid points better.

I''m still waiting.

[davidlar2]

I think I will start an American legacy-style carrier. I won''t actually buy any airplanes. I will just sell tickets, cancel all flights every day, hire 20,000 people, pay myself millions of dollars per year and ask the government for a bailout and subsidy to prevent 20,000 job losses....

[rudy2281]

American ingenuity-know how-technological supremacy give us mastery over:
The Katrina disaster
Failed FBI computer systems
Failed IRS computer systems
A lagging (?failing) auto industry
Idiots who apply for and idiots who issue sub-prime loans
American and United Airlines
Outsourced jobs
The venerable American news media
The chimp, his war and a crumbling economy
Crumbling infrastructure
Hero worship (Jesse James-Michael Jackson-Brittney Spears)

But not the crazy weather.

[lloydbest1]

If American (and maybe other) airlines had acted on FAA instructions in a timely fashion....
If airlines in general weren''t so concerned with the opinions of the stockholders and more so with that of the passengers they are supposed to serve....
If airlines weren''t consistantly behind schedule even when there are no distruptions (on the roughly 30 flights I''ve been on since 1999, exactly one was on time; and that one, interestingly enough, was on American)...
If airlines had extra craft held in reserve just for situations such as this...
If airlines didn''t consistantly overbook (ksl_188, I have never been on a flight in the last 15 years, at least that was not overbooked. I wish I had your luck finding those half empty flights)....

(Sigh...) If frogs had wings, far fewer of them would be et by the snapping turtles.