Airlines Expect FAA Furloughs To Cost Them Millions

By Andrew Compart
Source: AWIN First
April 22, 2013
Credit: Delta Airlines

Major U.S. airlines say they expect to lose tens of millions of dollars in revenue each month because of flight delays and cancellations caused by the FAA’s furlough of air traffic controllers, which began April 21.

Many carriers also say they are cancelling hundreds of flights to try to mitigate delays. Delta Air Lines, for example, says the additional cancellations will range from about 150 on a good weather day to nearly 400 on a bad one.

The carriers provided their estimates and flight cancellation plans to support a lawsuit filed with the U.S. Appeals Court in Washington April 19 by Airlines for America, the Regional Airline Association and the Air Line Pilots Association to reverse the furloughs, which will amount to a 10% reduction in controller work hours at every airport.

The FAA insists the furloughs are unavoidable because of the budget-cutting requirements of sequestration, but the lawsuit argues that the agency’s plan is damaging, unnecessary and incorrectly applied.

In a declaration filed in conjunction with the lawsuit, Delta says its potential daily loss from the disrupted operations could exceed $575,000, based on the delay projections the FAA has provided. But the revenue damage is greater than that, it adds, because the airline expects some customers will choose not to fly “to avoid the widely publicized delays and cancellations.”

“Our revenue management and finance teams estimate that this negative impact upon demand could result in the loss of up to 2% of our domestic passenger revenue, i.e., up to $40 million in lost revenue per month,” says David Holtz, Delta’s VP-operations control.

Holtz says Delta expects to implement “aggressive, proactive” cancellations at LaGuardia Airport, John F. Kennedy International Airport, Newark Liberty International Airport, Chicago O’Hare International Airport and Philadelphia International Airport to “manage connectivity and preserve the integrity of our peak schedules.”

Those additional cancellations are expected to amount to about 22 mainline flights and 130 Delta Connection flights a day in good weather, and about 80 mainline flights and 300 regional flights on a poor weather day, the airline says.

United Airlines says it expects the furlough-driven delays to cost it at least $2 million a day, or about $60 million each month, although it notes that “these estimates are rough and based on the available information as of today.”

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