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Airline Financials Should Get a Boost From Stellar Operational Performance

Most pilots I know will tell you that Fall is their favorite time of year. The towering summer thunderstorms have mostly died down and the winter blizzards have yet to hit. It's just a nice time to fly. The DOT just released the Air Travel Consumer Report for travel during November, and the airlines posted some incredible on time numbers. That's great for customers, and it's great for airlines. Running an on time airline really brings costs down.

During November, reporting airlines saw 88.6 percent of all flights arrive at their destination within 14 minutes of schedule. That is just an amazing number when you think about the complexity of this system. Planes break, weather goes bad, and a million other things can happen to slow things down. Yet during November, more than 450,000 flights landed on time. The front line employees deserve kudos for being able to manage that.

When planes run on time, fewer people miss their connections. That means the airline doesn't need to find room for them elsewhere and potentially end up bumping people. The airline also doesn't need to pay expenses for hotels and meals if the delay is their fault. They also don't have to worry about overtime, crew rest issues, and a host of other issues. It saves a lot of money.

Cancellations were also down. No airline canceled more than 1 percent of their flights. The amount of costs saved thanks to not canceling flights is obvious, but there are more subtle savings as well.

Mishandled baggage numbers were down as well. Much of this is probably because the operation ran on time. That helps to reduce the number of lost bags, and lost bags are expensive. Even if the airline finds the bag, they generally have to deliver it. If they don't find the bag, well that costs a fair bit as well.

Not only do costs go down when operations run well, but people tend to be happier. The only airline with more than 1 complaint per 100,000 passengers was the combined Delta/Northwest (DAL). Any time there's a merger, complaints always spike during the transition so that's not a surprise. But to see an airline like perennial cellar-dweller US Airways (LCC) actually come in with a 0.9 rate says a lot about the state of the industry during November.

Of course, the honeymoon was short-lived. December proved to be an absolutely brutal month as we'll see when the DOT releases stats. Want a preview? JetBlue (JBLU) ran only 66.8 percent of flights on time and canceled more than 3 percent. Ah, winter. Why do you have to go and ruin a good thing?