Five years after 9/11, the US airline industry finally is showing signs of recovery, but with some airlines in much better shape than others. Rising fuel prices have hit the industry hard, particularly the already fragile carriers who don't have fuel price hedges. With oil around $70/barrel, prices and fares are heading straight up.

Planes are fairly full, schedules about back to the level of 2001. Since the UK bomb plot was reported in early August, the rules about what you can take with you on the plane rather than check, particularly what amounts of what kind of liquid, and what electronic equipment, have been changing unpredictably from day to day and place to place, despite the fact that the authorities have known for at least a decade that bad guys might try to use liquid bombs detonated by consumer electronic equipment.

 

Northwest and Delta are flying in bankruptcy. The airlines that aren't bankrupt have shrunk themselves and raised fares enough that in 2q2006 they all managed to show modest profits. American, Continental, Southwest, US Airways, Airtran, JetBlue, Midwest, and even United are in the black. National, Midway and Vanguard Airlines are out of business, Independence Air threw in the towel and stopped operating as of Jan 5, and Canjet is shutting down scheduled service on Sept 10th.

Northwest and Delta went into Chapter 11 within minutes of each other in early September. Delta is financially in worse shape having hocked everything in sight before finally throwing in the towel. Speculation abounds on what will happen; one possibility is Continental picking up some pieces of Delta with the rest being merged into the smaller but healthier Northwest. Except that Northwest's flight attendants are threatening to strike over the givebacks Northwest is demanding, and the bankruptcy court says they can strike as soon as Aug 25th. The FA's say they don't plan a full strike but rather unpredictable walkouts one flight at a time, but the company still says that's likely to lead to liquidation. Delta has wrung givebacks from the pilots union and other employees, which has limited the bleeding a little, and they appear to have dodged a fatal pilot's strike in early April.

Hawaiian has emerged from bankruptcy, and Aloha recently rounded up some money and emerged, too. It's hard to say what the prospects for either will be. Maybe they'll merge and die together.

 

US Airways slogged through its second bankruptcy, and merged with America West, with the combined company to be called US Airways but run by the management of profitable America West, which hasn't been bankrupt for a couple of years. For now they're operating separately, to be integrated during 2006. The new US Airways surprised us all by being profitable in 1q2006, and say they expect to be profitable for the year. Their stock has doubled since the merger. With all that nice fluffy stock, the Wall Street Journal says they've been making overtures to Delta, although Delta says they're not interested.

ATA made a surprise deal with Southwest to provide codeshare service between Midway and places Southwest doesn't go, such as New York LaGuardia and Hawaii. A private investor took them private at the end of 2005 as they came out of bankruptcy, so they no longer publish financial results.

Air Canada emerged from bankruptcy in OK but not great shape, and has been modestly profitable, making it look like a survivor, particularly since low-cost competitor JetsGo turned out to be so low cost that it ran out of cash and died, and surviving low cost competitor Westjet isn't competing very hard.

Passengers are subject to much more extensive screening than in the past, including screening of checked baggage at check-in time, and, according to news reports pat downs that approach groping. Airlines recommend arriving at least an hour earlier than before. In my experience the extra delay is rarely more than 15 minutes, even with the extra baggage screening, although I usually fly out of smaller airports, not big hubs where you can get the killer two hour lines. The TSA has taken over screening at most airports but the inconsistency in procedures from one airport to another, particularly with respect to your shoes, is worse than ever. I've gone through the metal detector, it beeped, I went back and took my shoes off, walked through again, it beeped again, and they didn't notice (so neither did I, since I'm pretty sure I have no plans to blow up any planes.) A variety of extra cost "trusted traveller" may allow people to get through the screening faster, or may just involve waiting in a different line. The TSA makes no promises. They have a web site with estimated wait times based on averages in previous months, not real time numbers. Foreign airlines are flying to and from the U.S. normally.

Other changes include: some airports have stopped curb-side baggage check, anything vaguely resembling a knife or lighter may or may not be confiscated, you're often only allowed one carry-on plus a purse, briefcase, diaper bag or the like, non-passengers aren't allowed past security without a gate pass from an airline, all passengers must have a document that looks like a boarding pass at most airports to get past security, some parking areas close to terminals are closed. But check-in clerks no longer have to ask you whether you packed your own suitcase.